Compliance in finance: why written note-taking will no longer stand up as evidence
The new MiFID II regulation, which came into force in the EU in January 2018 to protect investors, stopped short of requiring recorded video footage of face-to-face meetings to ensure compliance in the financial industry. Instead it stipulated note-taking after meetings “to capture any substantive points raised in the relevant conversation that provide material context and colour to the decision taken by the client”.
This is not a suitable or satisfactory long term solution. Written or even typed notes are subject to scrutiny. Can a financial organisation use written notes to prove beyond doubt that the customer actually understood and agreed what was being discussed with an advisor?
Video recordings of meetings with customers provide an air-tight record of what was discussed and agreed. They are also more befitting of the digital ways of working that are taking hold in financial services. Right now, many banks are offering video as part of their service offering when speaking to customers. For example, Barclays, Lloyds Bank and Halifax offer their customers face-to-face advice via video link. Nationwide Building Society also provides video-based mortgage consultations. In the wealth management space, select organisations are using high-end video conferencing to offer personal services to clients across the globe.
So how likely is it that in a video-driven age of communication that regulators are going to hang on to the notion that written or typed notes are a sufficient way of recording meetings?
Regulation and compliance are adapting to new technology
Inevitably, regulations will change in line with the growing use of video. We can expect that the next iterations of regulations like MiFID II, for example, will recognise the growing importance of video and stipulate that all interactions are video recorded for compliance reasons. As these changes occur, so will banks’ methods of working. They will need to use video or audio as a means to capture client meetings, show consent, and maintain compliance. As it happens already with eDiscovery, organisations must also be able to find, secure and produce information that could be useful in legal action, and this extends to video as it falls under electronically stored information (ESI).
Video technology also drives efficiency
The use of video is not just about being reactive to regulation. In our discussions with financial institutions, we’ve discovered the practice of using video to capture post-meeting notes as part of a drive for efficiency.
For example, it only takes a few minutes to record video notes on a smartphone, whereas the same notes could take 20 minutes to type up manually. Assuming an advisor has five meetings over the course of every week, that equates to a savings of nearly two weeks per advisor per year. You can see where the potential gains are.
To make the most of this, financial organisations are also going need to improve the way they manage and archive all their video content. In most cases, they are going to need to invest in a media asset management system that enables them to tag, store, search and retrieve the videos whenever they need them.
Ideally videos will undergo a speech-to-text process, which immediately applies tags and metadata to the files and adds further time-saving efficiency. This also makes eDiscovery and compliance highly efficient, because you are able to search and retrieve customer information more easily when requested by a court, individual or regulator.
Banks that get this right will be stealing a march on competitors. More than that, they will be getting ahead of the compliance curve and potentially avoiding significant fines.
Find out more
Recently, we’ve been researching video in the finance sector and how media asset management technology can be applied to manage emerging compliance issues.
Read more in our latest report on Video in financial services: solving risk and compliance challenges.
By Nathan Birtle, VP sales, Imagen