08 Jul From regulation to recession: The storm of 2018-2020 for financial services
First came MiFID II and RDR in January 2018, then the expansion of the Senior Managers & Certification Regime in December 2018, and then COVID a year later.
MiFID, SM&CR and COVID – The triple hit
Another twelve months down the line, as the sun sets on a bleak year, it’s hard to remember what the world was like pre-virus. It has left the global economy battered and has been the toughest opponent the financial services industry has faced since the Global Financial Crisis. Adaptability has been the name of the game in the last 18 months to two years, and some players have struggled to keep up.
The advent of stricter regulatory practice with MiFID II and the requirement for MiFID II client meeting notes firstly stretched financial advisers’ and salespeople’s time (and likely nerves), resulting in them having to dedicate hours they may have otherwise spent with clients writing up historical meeting notes and minutes or summarising the contents of a phone call. Thus, the pre-existing battle between time management and revenue generation became harder to fight. As firms’ admin needs increased, so did the burden on advisers and support staff alike. In their June 2020 IFA DNA, ‘Skills of the modern financial adviser’, Fidelity FundsNetwork showcase research data that tracks this change over time, affirming that ‘significantly more’ time is being spent on administration – ‘more detailed and more frequent reports’ – and compliance within companies.
The regulation overhaul continued into 2019 with the expansion of the SM&CR as firms slowly adjusted to more intense record-keeping and information gathering, in addition to MiFID II client meeting notes. The Senior Managers’ Regime is an exercise in ethical governance in the wake of the last storm, the Global Financial Crisis, and this increased production of data – whether pertaining to clients or other business-to-business information – comes with its own associated concerns around security, hence the concurrent increase in internal compliance and data security practices within companies.
The second half of 2019 saw the industry enter what one would later identify as the eye of the storm, before COVID ripped through the economy.
Everything changed. For everybody.
Business communication did not decrease – for many it increased – but what was once an adviser’s or a salesperson’s bread and butter became something altogether less palatable as physical interaction ceased overnight and we all, across all industries, took to virtual means of conducting day-to-day business. The rules on regulation have not changed, but the ability to conduct ongoing monitoring has, and this has not been without consequence, as evidenced by the extension of the SM&CR implementation period for solo-regulated firms (FCA, 30/06/20).
If anything, the requirement for record-keeping and information-gathering as we traverse this never-before-trodden landscape and settle into a post-COVID world is more vital than ever. The financial industry is not alone in facing an exercise of, ‘What can we learn from our response to this pandemic?’. Records and notes will be archived and referred to in years to come, and those firms who learn the most about what they did well and what they perhaps would do differently in future will have the best, most concise records.
The future for regulation in financial services
The regulatory landscape will continue to evolve, so record-keeping is here to stay. There are, of course, still question marks over what EU regulation like MiFID II will look like in the UK when our Brexit transition period ends next month; nonetheless, it’s unlikely that the current state of play will change much. Meeting notes and senior manager records will still need to be made, filed and kept. Take control of the quality and content of your own records by using a trusted, secure, ISO 27001-accredited transcription and proofreading service like VoiceNotes. We care about more than just getting the words on the page – we strive for perfection in every dictation and audio transcript we process. We ensure consistency of structure and format, correct use of grammar throughout, and we fact-check every name, date and piece of information provided.
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