How should CMCs prepare for the FCA’s proposed rules on conversation recording?

The Financial Conduct Authority has proposed a wide range of new regulations for claims management companies, including rules on recording and storing customer calls. Recordsure spoke with Mark Braddock, COO at Recordsure, about the proposed changes, why they are not surprising and how firms can respond.

What are the proposed changes?

The proposed rules range from giving potential customers a short summary document containing important information to greater transparency around no-win, no-fee services. A full list is available on the FCA website, but the area that stood out was phone conversations.

The FCA singled out phone conversations as a potential source of harm in the market and an area needing intervention to improve transparency. Two key components are proposed:

1. CMCs will need to record all calls they have with customers.
2. They will need to store these audio files for a minimum of 12 months.

The intention is to reduce nuisance calls, such as cold calling, and potentially aggressive sales techniques. The FCA also proposed that CMCs keep a record of electronic communications such as emails and text messages.

Why are these new regulations being planned?

The FCA is due to become the regulator of CMCs on 1 April 2019 and has been considering ways to safeguard consumers. Phone conversations have emerged as one of the areas most in need of more structure.

The FCA said: “A large proportion of CMCs’ business is conducted by telephone and this is where much of the harm in the market occurs, such as poor service or misleading or aggressive marketing.”

The focus on telephony is not a surprise. The FCA has been vocal about the importance of accurate and comprehensive data, and these changes would bring CMCs into line with other sectors within the FCA’s jurisdiction.

How do firms need to prepare?

At minimum, firms need infrastructure to record and securely store customer phone conversations. This includes technical implementation as well as process planning and training where these practices are not already in place.

Firms also need to consider how their audio data is structured. When recordings need to be reviewed, evidencing compliance can become a project in itself, with data analysts sifting through many audio files.

Recordsure had a recent case where its AI technology automated elements of this process, enabling analysts to audit audio files 60% more efficiently than through traditional methods. The workload around an audit can be substantial, so planning in advance and structuring audio data carefully matters.

How can CMCs embrace these changes and strengthen business?

Some firms may view the regulations with concern, but there are opportunities for organisations that respond early. Reviewing processes and infrastructure can create a chance to make wider changes that strengthen the business.

Recordsure software can improve the sales cycle by highlighting points in conversations that are well received or where engagement tails off, giving insight that can guide messaging and maximise conversions. It can also help identify potentially vulnerable customers, aligning with the FCA’s focus on consumer welfare and providing a positive brand differentiator.

The proposed changes focus on phone calls, but firms may also consider whether similar procedures would be valuable for face-to-face conversations. This is not currently part of the proposals, but it appears consistent with the FCA’s wider ethos and could help future-proof businesses while extending voice analytics insight and audit trails across another channel.

The most successful companies often embrace change rather than standing still. The FCA’s proposals should be viewed as an opportunity for affected CMCs.