Could Restrictive And Powerful FCA Insurance Regulations on WhatsApp For Advisers Be On Its Way? Could we soon be seeing FCA insurance regulations on WhatsApp and other commercial-style communication apps? Read on to see what we think here in

Could Restrictive And Powerful FCA Insurance Regulations on WhatsApp For Advisers Be On Its Way?


Could we soon be seeing FCA insurance regulations on WhatsApp and other commercial-style communication apps? 


Read on to see what we think here in BrokerIQ. 


WhatsApp Messenger App


There is no doubt about the valuable contribution Whatsapp has made to communications in recent years. The Messenger App now boasts two billion loyal users who have downloaded the operating system through the android and apple stores. 


The software offers users full functionality with video and voice calls as well as text and multimedia messaging. All with just a simple internet connection. 


This giant of the communication world provides free communications to all who download the app, with full end-to-end encrypted security for all that use its functions.


And herein lies the problem for brokers and the finance industry. 

WhatsApp in Business – The Good, The Bad and The Ugly.


Sharing financial, personal or sensitive documents and information on the same app as you connect with your uni friends has an edge of the unprofessional about it.


We’ve all been there. Sending the odd media message to the wrong group or voice note to your neighbour at best can be embarrassing, but at worse, can be against the FCA’s regulations. 


It’s a very risky game to play with other people’s information.


A game that has managed to get those in the finance and insurance sectors in hot water.


In 2020 we saw several employees of Morgan Stanley group dismissed for using Whatsapp for business purposes as well as JP Morgan suspending an employee for communication with colleagues through the app.


Perhaps more worrying was the fine FCA imposed on Christopher Niehausa former investment banker, of £37,198 for sharing confidential client information over WhatsApp.  The FCA found that Mr Niehaus failed to act with due skill, care and diligence.


The FCA stated:

We view these actions as serious and have sought orders preventing such individuals from carrying out these activities in the future. We expect this to remain an area of focus.


And to top it all off, in the US, JP Morgan was hit again with more scandal when they were fined $200 million for failing to keep track of workers' use of messaging apps by the SEC.


The issue is no doubt is a global one. 


As we are aware, traders, bankers and brokers are all subject to very similar strict rules and regulations regarding other people’s data and information. The problem, however, is that apps such as Whatsapp, Telegram and Threema are all built with secure, end-to-end encrypted software; meaning that communications are untraceable, inaudible and a long way from being GDPR compliant. 


Principle 2 FCA:

“A firm must conduct its business with due skill, care and diligence.”


We in the insurance industry, who deal regularly with people’s sensitive data, are playing a game of chicken with the powers that be if we choose to use WhatsApp and is only a matter of time before FCA insurance regulations are fixed upon us. 


Working from home has also added to the debate:

Risks from misconduct may be heightened or increased by homeworking. This includes increased use of unmonitored and/or encrypted communication applications (apps) such as WhatsApp for sharing potentially sensitive information connected with work. Use of such apps can present challenges and significant compliance risks, since firms will be less able to effectively monitor communications using these channels.


FCA January 2021 Newsletter on market conduct and transaction reporting issues.


As consumers ourselves, we would find it pretty unacceptable to discover our information was floating around both in our broker’s WhatsApp as well as in their ‘Images’ album on their phone.

Certainly not ideal..



The Disadvantages of using WhatsApp in Business


The disadvantages of using WhatsApp are numerous:


  • Unprofessional
  • Lack of Privacy for Client
  • Reduces Productivity
  • Not Traceable and Inauditable
  • Lacks Transparency
  • Incompatible with FCA Regulations such as Principle 2
  • Likely to see FCA restrictions in the Future. 
  • Conflicts with GDPR


The New Whatsapp – Solving the Problem


Using these commercial-style apps leads you down a deep, dark rabbit hole of obstacles and security problems that are a navigational and professional nightmare. 


But in the workplace, communication both with colleagues and clients is fundamental to success. 


So what to do? Well, the alternative is simple. The use of in-house app features that are connected with your place of work’s platform and software of choice eliminates the risk and let’s be honest, stress, of ensuring you are keeping on the right side of both your own companies policies as well as the FCA’s regulations.


No one wants another £160 million fine for using an app!


In their January 2021 Newsletter on this matter the FCA stated:

There is no specific restriction on the technologies or apps firms can use for communications. However, in all cases, firms must understand the recording obligations and have effective policies, controls and oversight to ensure that these are met.


WhatsApp and similar communication software simply do not offer the recording obligations that are required to ensure compliance. 


Choosing to use an in-app chat such as our own BrokerIQ chat feature, ensures that all your conversations and communications with clients are fully traceable, auditable and transparent. Keeping everyone involved safe and reassured as well as offering the much craved, personalised experience for the consumer.


And let’s face it, having this technology accessible on your phone as an app (both broker and client versions now available), is utterly convenient and easy. 


Communication with a client is quickly moving from cumbersome to manageable. 


Other platforms too also offer an in-house chat feature such as:


  • Intercom
  • Help Crunch
  • Live Agent
  • Nivo


So as expectations of personalization and real-time communications from clients increase, providing a convenient communication network that is GDPR compliant, transparent, traceable as well as satisfies all FCA regulations is key to your success.


Remember, Big Brother is always watching…

“We expect this to remain an area of focus.”


FCA January 2021


We anticipate a full WhatsApp-style suppression here at BrokerIQ in the near future from the FCA for the financial and insurance industry…. 


You heard it here first!


Let us know what you think. Do you see the FCA restricting and regulating the use of WhatsApp in the future?  Leave your comments below to share what you think!