PwC has been forced to scrap a surveillance tool that records background noise in traders’ homes after City bosses rejected the technology over privacy concerns, Financial News can reveal.

The background noise tracker was part of a suite of PwC surveillance tools for finance firms, which includes devices that have been attacked for being too intrusive.

Last week, the Big Four accountancy firm faced criticism after FN revealed it was developing a facial recognition tool that logs employees’ absences from their computer screens, including for bathroom breaks.  Political heavyweights, HR experts and market commentators branded the tech as “a huge intrusion on privacy”. The facial recognition tool is still being offered to PwC clients.

PwC was planning to develop a background recording device that would track noises generated by home-bound traders during the working day and alert compliance when any unusual sounds are detected. 

The tool was designed to detect if traders were using personal phones, typically banned on trading floors, and to catch any possible misbehaviour taking place away from recorded channels.

However, finance executives who saw a prototype of the noise tracker raised “privacy concerns”, according to George Stylianides, a partner in PwC’s financial services group.

“We offer it as part of our [surveillance] solution, but there is a privacy concern around [it],” Stylianides told Financial News on 10 June.

“No one’s really gone for that… it’s in our solution, but no one really wants [it], no one’s interested in deploying it.”

A person familiar with the matter said the tool was “mothballed” after feedback from City executives earlier this year, however, and a PwC spokesman said on 18 June that the device was “not being offered” by the group.

The spokesman said: “We are developing technology specifically to support the compliance environment required for traders and front office staff. Crucially it is designed to support those adhering to the regulations while remote working, in the least intrusive, pragmatic way. Privacy safeguards are central to any adoption.

“That’s why we’re having exploratory discussions with clients about their needs and which aspects of the prototype can achieve them — the background noise detection is not being offered in the solution.”

PwC’s technology is designed to help firms match the level of strict surveillance on office trading floors, now that thousands of employees are working from home during the pandemic.

“When you’re on the trading floor, you have got supervisors that are actually looking at people and people can’t take their mobile phones onto the floor. You don’t have that restriction at home,” Stylianides said. “You’ve got people with families or you’ve got younger people who are potentially sharing where they live. The risk of unauthorised trading or misconduct is higher.”

Silkie Carlo, director of Big Brother Watch, a privacy campaign group, called the noise tracker “completely inappropriate” and “ill-judged”, adding that “the fact that people are working from home due to the pandemic does not change the fact that our homes are private spaces”.

“[This tool]  indicates a worrying disregard for privacy, data protection and employees’ rights,” Carlo said. “The surveillance industry is proving itself a grave risk to fundamental rights during this crisis.”

Financial services is one of the world’s most regulated industries and staff are accustomed to high-tech surveillance of their phone calls, emails and texts. The onset of the virus has heightened worries among compliance departments about monitoring hundreds of thousands of City workers now scattered throughout the country.

Banks, asset managers and trading firms have seen a rise in misbehaviour amongst remote-working staff, and regulators are bracing for more market abuse cases, as the virus puts pressure on monitoring systems not previously used to track thousands of home-working employees. 

Mark Steward, the Financial Conduct Authority’s executive director of enforcement and market oversight, told FN in April that the regulator was expecting an uptick in market abuse cases in the wake of the pandemic.

To contact the author of this story with feedback or news, email Lucy McNulty

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