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How the USA and its Dodd Frank Reform can learn from call recording legislation in the UK


By Neil Hammerton, CEO of Natterbox

In November 2011, the UK’s Financial Services Authority introduced a ruling that all mobile phone conversations relating to transactions in the equities, bond, derivatives and financial commodity markets must be recorded and stored for six monthsto help deter and detect market abuse in the UK.The USA is soon to replicate the UK’s regulations, following President Obama signing a federal law for the Dodd-Frank Wall Street Reform and Consumer Protection Act.Neil-Hammerton

The US-based legislation, the Dodd Frank Reform, also requires telephone trades to be recorded. The reform comes into force in March 2013, and states that all foreign banks trading with the USA, not simply those located within its borders, must also comply and record mobile communications.

While the UK’s original call recording legislation was introduced in 2008, it was globally the first authority to regulate mobile call recording in November 2011.On introduction, most financial institutions opted for an app-based solution to record their calls, as this was the most readily available option at the time. However, in many cases this later proved to be troublesome and time consuming. For a start, it was all too easy for end-users to uninstall the app, which could leave financial institutions non-compliant and open to legal prosecution. IT departments also discovered a number of technical issues causing costly distraction and down-time for traders.

Even though the FSA legislation was directed at UK companies it was applicable wherever the traders made calls, regardless of physical location.One of the key problems that many banks and financial institutions found with app-based solutions was the lack of reliability when abroad. This was because local network providers were unable to support the necessary technology, therefore making calls made abroad non-compliant. There have also been problems with a time-lag when connecting a call with app-based solutions, causing both delay and irritation in an industry where timing is everything.

In light of these problems, banks opting for an app-based solution initially are now starting to review their contracts and look at the alternatives.We’re now seeingthe industry move towards a network-based solution focused on a phone’s SIM card, such as the Natterbox and Orange Business Services Trading Solutions service.

In the last year, Natterbox has experienced a new wave of demand for its services as it offers network-based compliant call recording which is app-free. As a result, the network-based solution is growing in demand as it is viewed as a more cost effective, efficient solution that delivers true compliance.

At present, the UK is a world leader in terms of cracking down and ensuring the recording of calls to help eradicate market abuse, simply because it was the first to have the rules enforced.In fact, the Dodd Frank ruling is very similar to that of the FSA but it doesdiffer slightly as call recordings have to be kept for a year, rather than just six months. And, these recordings must also be stored in a searchable format which is causing huge anxiety in the USA at present.

Companies must investigate thoroughly whether an application-based solution will service their needs fully.As a result of the similarities in rulings, many financial organisations in the USAare attempting to learn from the early mistakes made in the UK when selecting a call recording partner. Voice is a critical business communication tool and one of the biggest revenue generators for financial institutions. Regulation on recording mobile calls demonstrates how much professionals are working remotely and making business calls on the move.

It is estimated that about 60 per cent of the UK market is compliant at present, and this number will only increase as the FSA starts to crack down on non-compliant organisations in 2013. The Dodd Frank Wall Street reform has pledged to impose stiff penalties for those companies failing to comply.

So, as the deadline looms closer there is even less of an excuse for US-based companies to be non-compliant. They are in an enviable position to have the opportunity to learn from the UK when it comes to a choice between anappor network based solution. There is also a likelihood that mobile call recording operators will start to see a growing interest from industries not affected by the FSA or Dodd Frank rulings. Companies offering services such as mortgage broking and law will begin to realise that having call data on file is very helpful for compliance, staff training and management.

Financial institutions regulated by both the FSA and Dodd Frank rulings have a huge amount of business intelligence to gain by using the call data as a tool to improve operational efficiency and customer experience. Every conversation-taking place on a mobile or landline is priceless business intelligence and companies must effectively capture andutilise this information in order to enhance performance and achieve growth objectives.





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