Study finds 40% of firms at risk of MiFID II fines up to €5 million

Firms at risk of not complying with MiFID II’s Article 16 record keeping requirements, research says.

A significant 40% of financial services firms are at risk of being fined up to €5 million for failing to comply with record keeping rules under MiFID II, according to research.

The study, carried out by communications technology firm Teleware, found that only 60% of companies in financial services have sufficient technology and processes in place to record and capture real-time communications.

Teleware explained that the remaining 40% of firms are risking non-compliance with Article 16 of MiFID II, which came into force on 3 January, and could face fines of €5 million or 10% of their annual turnover.

MiFID II’s rules on record keeping require firms to keep all records of transactions, services and activities, including telephone conversations and electronic communications. Complying with the requirements has led to firms deploying communications recording technology.

If records were kept sufficiently and could be recalled with ease, 58% of financial services employees surveyed by Teleware agreed it would improve customer experience, and 54% said it would improve employee productivity.

“Financial services firms have been dealt a tricky hand in 2018, with MiFID II and GDPR coming into force just months apart,” said Teleware’s chief executive, Steve Haworth. “And with some contradictory requirements when it comes to the recording of personal data.”

“As the threat of non-compliance is so high, it’s critical that firms make the necessary investments in technology and infrastructure. Ensuring all employees have the tools to be compliant. Our research has shown that firms that do so will reap significant benefits in return, in addition to mitigating the compliance risks.”