Zoom calls provide an option to replace SR reports
Written on 15/05/2020

Zoom calls provide an option to replace SR reports

If you provide advice over a recorded zoom call, that may sufficicient to act as the bulk of a Suitability Report.

The very essence of a zoom call is that both sides are being recorded, and to be able to retain that record of a conversation, is critical to the auditing of the work, and provides the essential footprint of what actually happened, enabling both sides to be clear on understanding.

There is still a requirement to produce a SR report in writing.  The FCA rules only specify the report format in the rules for term assurance sales, where in Cobs 7.4 of the FCA rule book it refers specifically to a “durable medium”.  That of course can include a recording, or even a transcript of a recording of a zoom call. 

Incredibly this requirement appears only for term assurance, and under the SR report section for investment business, the rather lighter EEA legislation puts the handcuffs on the FCA, and the rules refer in COBS 9.4 to “provide the client with a suitability report” 

See the actual text below

Providing a suitability report: MiFID business

COBS 9A.3.3EU03/01/2018

54(12) When providing investment advice, investment firms shall provide a report to the retail client that includes an outline of the advice given and how the recommendation provided is suitable for the retail client, including how it meets the client’s objectives and personal circumstances with reference to the investment term required, client’s knowledge and experience and client’s attitude to risk and capacity for loss.

Investment firms shall draw clients’ attention to and shall include in the suitability report information on whether the recommended services or instruments are likely to require the retail client to seek a periodic review of their arrangements.

Where an investment firm provides a service that involves periodic suitability assessments and reports, the subsequent reports after the initial service is established may only cover changes in the services or instruments involved and/or the circumstances of the client and may not need to repeat all the details of the first report."

It is a risky approach to go against the grain of “normal process”, in the FCA regulatory world where ultimately only

Eleven rules define our existence – those eleven principles, which all contain rather vague statements of intent that are subjective views without clear boundaries beyond the “reasonable” approaches.  But what you can do is use phone recording to reduce your PII costs– and ensure that you have an added line of defence to show to stakeholders such as complainants, regulators, potential acquirers etc, in addition to what is, after all, is conventional good business practice - to provide a summary report on what you have done and why.  What this new world does is provide options for you to enhance your service.

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