The City watchdog is clamping down on how bankers communicate over concerns that they are using WhatsApp and other private messaging platforms to exchange information about deals, rather than regulated avenues.
The move follows action by the US financial regulator that led to 16 banks, including Citigroup, Barclays and Goldman Sachs, agreeing to pay more than $2 billion in fines to the Securities and Exchange Commission for not adequately monitoring employees’ use of chat services.
Financial services businesses are meant to record their electronic communications so that they can be audited by the Financial Conduct Authority, something that has become increasingly difficult to do with the proliferation and popularity of WhatsApp, Telegram and Signal, and raises the suspicion that they are trying to avoid scrutiny.
The City regulator said that it was “actively discussing personal device use with a range of UK authorised firms” and while it would not confirm which companies it was approaching, it said they were “not limited to those who may have been subjected to other regulatory enquiries”.
In a newsletter published in January last year, the regulator said that the number of people working from home could increase the risks of not complying with the recording requirements.
“It is important for firms to proactively review their recording policies and procedures every time the context and environment they operate in changes,” it said.
“We expect firms to have a rigorous monitoring regime, where in-scope activities may be conducted outside the controlled office environment.”
One City insider said: “We’ve had a big crackdown recently and our bankers know as soon as you go into a deal that the information must be on a recorded line or on email.
“But a lot of CEOs, particularly in the media, are so used to updating us using WhatsApp, that the problem is they reply using that medium.”
They added: “This presents a problem to bankers as they don’t want to appear old-school, because it looks bad, but at the same time they have the regulator on their back.”
Another bank employee, who does not work on deals, found that he had his phone rerouted last week. “It shows just how nervous banks are about this.”