As the recent National Security Agency scandal has highlighted, the surveillance of citizens and business by governments and regulatory bodies is as contentious as ever. In their own way, banks have been grappling with this issue ever since the FCA mobile taping regulation was introduced.
Two years after the FCA made all mobile communications recording mandatory for employees involved in trading, between one and two thirds of the target audience have yet to be fitted with recording technology. Some banks are banning mobile phones on the trading floor to circumvent the regulation. Would you trust a bank that avoids regulatory compliance?
Banks argue that compliance is costly. One investment bank’s analysis indicated a cost of £10,000 per user for a year’s recording solution with an associated cost of £2,000 for on-going maintenance. Another global investment bank has estimated recording enforcement costs of £2.6m a year for all front office staff with a Blackberry.
There is also great uncertainty over the actual technology the banks should buy to tape mobile conversations, with software-based and SIM-based options already cluttering the market.
In addition, if the policy is communicated poorly, recording staff breeds fear and mistrust and promotes a big brother culture in the workspace. Will FCA become satisfied with their degree of scrutiny or demand a tracking device to be placed on the movers and shakers of the financial industry a few years from now?
However, for banks, compliance is not just about the balance between costs and benefits. It’s about winning back the trust. End-consumer demand is starting to drive the industry. A bank that demonstrates commitment to working with the FCA to tackle market abuse can begin to rid themselves of the negative reputation plaguing the industry since 2008. In addition, banks can benefit from this regulation by collecting trading analytics and identify patterns from their employees’ recordings. Banks can monitor employee productivity and benchmark against peers.
In conclusion, trust must return to the banking industry. A key driver to this trust is taking regulatory compliance seriously. If banks are attempting to find a loophole in this rule, what other laws are they failing to comply with? As the industry continues to evolve, a bank that acts with integrity will stand out from the crowd and reap the rewards.
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