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FSA Call Recording: Big Data

As most of us know, new FSA rulings came into force at the start of last month, demanding that regulated investment firms record all mobile phone conversations relating to transactions in certain markets and store them for six months. These companies already have to store landline conversations securely, and this new ruling will add a further burden to IT systems.

With the FSA itself admitting that the cost of putting recording and secure storage systems in place could add up to £10,000 per user each year with an ongoing cost of £2,000 per year per user, the total cost to financial organisations could be astronomical.

For a large investment bank like UBS, which employs approximately 6,000 people in the UK, perhaps a third of whom will have company-supplied mobile phones, this equates to an initial investment of £20m to record conversations with an ongoing cost of £4m each year. This represents a significant burden for banks – albeit one seen as necessary in the wake of the imprudent investment decisions made by a small number of banks in the last few years.

However, add to this the ever-present tidal wave of ‘big’ data and these organisations are increasingly facing an insurmountable wave of information to be stored, accessed and managed. In many cases, this information can add value to organisations, but in others, it needs to be stored and destroyed after the requisite period. This ruling clearly falls into the latter category, and companies should act sooner rather than later to put solutions in place which can cost-effectively record and store this data.  

 

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Comments: (3)

A Finextra member
A Finextra member 15 December, 2011, 08:15Be the first to give this comment the thumbs up 0 likes

It's very worthwhile looking at MiFID on the topic of voice recording, because it takes the requirement pan-EU - not just a requirement of the FSA in the UK.

A Finextra member
A Finextra member 15 December, 2011, 13:21Be the first to give this comment the thumbs up 0 likes

A lot of water has passed under the bridge since the FSA made their estimate back in 2009. £12,000 has proved to be a significant over-estimate. This is in part because of the willingness of many financial institutions to use the opportunity to switch from high-cost on premise deployments to cloud-based solutions. Even costs of on-premise storage solutions have dropped considerably since the FSA first made their estimate.

CIOs could comfortably budget £1,500 per user per year for cloud-based solution. If they elect to store on-premise this could of course increase significantly depending on the architecture they wish to deploy, the cost of upgrading their existing voice recording infrastructure (which can be significant) and the number of users they are spreading the cost across. But it's safe to assume that £12,000 is still at the high end.

By applying the FSA regulations to the letter 30% staff deployment is also high. In investment banks, only trading desks and sales teams are being required to comply. Clearly, as banks embrace the wider benefits of mobile working the more wide spread implementation is likely to be. Business continuity planning is one such example. Wider adoption will also drive down unit costs.

And as motivations move away from pure compliance, investment decisions should be easier to pin to return on investment. Then again, what value do you place on effective compliance? Ask UBS.

A Finextra member
A Finextra member 15 December, 2011, 16:15Be the first to give this comment the thumbs up 0 likes

I don't see the current FSA mobile phone recording requirement, which is being applied to a subset of the firm’s mobile phone users, creating such a huge increase in data storage requirements. However, it is the right time to raise questions over regulatory compliance, retention periods and the growing need for data storage.

MiFID II proposals are a few years off of being in place yet, but a more comprehensive European wide directive with retention periods in years rather than months could easily be seen as an oncoming data storage ‘tsunami’. This is before we start looking into other potential areas for greater surveillance and recording such as video conferencing and social networks like twitter.   

Firms are already looking into more cost effective infrastructures and perhaps, better leverage of cloud technologies through third parties or via internal enterprise wide programs. However, accessing or storing highly confidential business data over a ‘public infrastructure’ or complying with strict regulator rules in respect of transmission of data across borders, also raises concerns and new challenges.