Voice recordings of your conversations with clients are an acceptable record of advice and may be used for your defence in the event of a dispute with a client.
The FAIS General Code of Conduct for Authorised Financial Services Providers and Representatives (GCOC) requires providers to maintain a record of advice, which must reflect the basis on which the advice was given. It should include a brief summary of the information and material on which the advice was based, the financial products considered and those recommended. It must also have an explanation of why the recommended or selected products are likely to satisfy the client’s identified needs and objectives.
You are required to give clients a copy of the record of advice in writing, although this does not apply to direct marketers. The GCOC defines ‘writing’ as: “includes communication by telefax or any appropriate electronic medium that is accurately and readily reducible to written or printed form.”
A voice-recorded file clearly falls under the definition of “electronic medium”, but can a voice-recorded electronic file be “accurately and readily reducible to written or printed form”? The answer is yes, as a voice file can be transcribed. Providing advice over the phone and sending the client an email with a voice file of the conversation therefore satisfies the requirements of section 9 of the GCOC.
There are several reasons why voice recordings are preferable to the normal printed record of advice. The GCOC requires that you have appropriate procedures and systems in place to record verbal and written communications relating to financial services rendered. Financial planners often don’t make notes of all verbal communications with clients, so voice recordings will meet this requirement and provide solid proof if a dispute arises.
The GCOC requires that you take reasonable steps to ensure clients understand the advice you give so they can make an informed decision. While it is difficult to prove whether a client understood your advice, voice recordings make it easier to prove what was conveyed or advised and if the client confirmed he or she understood it.
You are also required to provide clients with an explanation of the nature and material terms of a contract or transaction and fully disclose information that would enable them to make an informed decision. Based purely on a paper version of events, it is difficult to prove this conversation happened. A voice recording provides solid proof of what transpired.
Is it legal to record conversations without a client’s consent or knowledge? Recording without consent is unlawful, except if you are a party to the communication, you have the written consent of one of the parties to the communication, or the recording is in connection with the carrying on of business.
As you are a party to the communication, you may record conversations without your clients’ consent. However, clients might feel betrayed if they find out you were recording them without their prior consent. It is therefore good business practice to inform your clients that you will be recording the conversation.
A voice recording is an accurate way to prove small details that could make a big difference. It is as much for your clients’ protection as it is for yours.
 Sections 4-6 of the Regulation of Interception of Communications and Provisions of Communication-Related Information Act 70 of 2002 (RICA)