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Brokers warned of telecoms firms mis-slling call-recording devices

Insurance brokers are being urged not to fall victim to telecoms firms pitching call-recording equipment on the grounds of regulatory compliance.

Although new regulations from the Financial Services Authority (FSA) will require financial services companies to record sales calls and client orders in the equity, debt and derivatives markets, the rules will not apply to insurance providers or brokers.

However, the regulator has received reports that telecoms and technology providers have targeted businesses not covered by the regulations, falsely suggesting they would be in violation of the rules if they did not buy recording equipment, which could cost businesses up to £30,000.

Sean Ryan, director of 500, an IP telephony solutions provider, claimed they were exploiting the vague wording of the regulations: "The FSA had to take a broad-brush approach to ensure it covers businesses that may offer cross-over services.

"However, it is not surprising to hear that some telecommunications companies may be mis-selling call-recording products and services following the FSA's policy statement. Ignorance of the applicability of the policy may be used as an opportunity for pushing call-recording technology to companies that do not require it."

But the FSA stressed that insurance brokers would not be subject to the regulations unless they also handled client orders in equity, debt and derivatives markets, such as buying or selling bonds or shares, or engaging in other investment and trading activities. In such cases, only the equity, debt and derivatives market-related activities would be subject to the new rules - not the insurance broking activities.

Abi Jones, spokeswoman for the FSA, said: "The purpose of the regulations is to tackle market abuse. This does not apply to insurance brokers carrying out regulated activities."

* Source: Insurance Age

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