Recently, UK regulators fined Morgan Stanley over £7 million (later discounted to about £5.5 million) for allowing its wholesale energy product traders to use Whatsapp instant messaging on personal devices. This resulted in the bank being unable to record and retain important communications regarding wholesale energy trading.


The regulator concerned was the Office of Gas and Electricity Markets (Ofgem) and they were seeking to enforce a regulation that required the bank to take reasonable steps to ensure that relevant communications were recorded and retained. In the course of investigations, Ofgem discovered that electronic communications regarding wholesale energy trading had been carried out by the bank's employees using WhatsApp, and these had not been recorded by the bank. It was further discovered that the bank could not ensure that those communications were recorded and retained as required by the regulation.

While the regulation Ofgem was concerned with is limited to the energy market in the UK, this case holds lessons for banks generally. The raison d'etre of Ofgem is to monitor the integrity and transparency of the wholesale energy market and the regulations it enforces aim to achieve this objective. In particular, the regulation requiring the recording and retention of electronic communications was seen by Ofgem as critical to ensuring that it is able to fully investigate and enforce any failure to comply with applicable regulations. Therefore, this was essential to ensuring that energy consumers and wholesale energy market participants have confidence in the integrity of the market.

Learning Points

Clear Policies and Rules to Govern the Use of Messaging Platforms

The use of instant messaging platforms such as Whatsapp for work purposes appears to be widely practiced especially among traders and salespersons. This is not surprising as it is undoubtedly a convenient and effective way to communicate and to quickly conclude deals. However, banks should have in place clear policies and rules to govern the use of such messaging platforms. The aim should be to take reasonable steps to ensure that any work-related communications such as those relating to deals involving the bank and its customers are recorded and retained for a reasonable period.

Monitor Compliance with Policy

In the case involving Ofgem and Morgan Stanley, Ofgem found that the bank did have policies in place which prohibited the use of non-bank approved messaging systems for bank business, and that the bank took some steps to try and ensure the policy was conveyed to employees. These measures included e-mail reminders of the policy, the requirement for employees to sign an undertaking not to use unofficial means for work purposes, and training specifically focussed on the misuse of WhatsApp and similar messaging systems.

Nevertheless, Ofgem found that the measures taken by the bank were not sufficient to satisfy the requirements of the regulation. In particular, Ofgem found that the bank did not take reasonable steps to monitor compliance with its policy on the use of non-bank approved messaging systems or assess the risks of non-compliance with its policies. It was only after Ofgem had identified the inappropriate use of WhatsApp that the bank took the issue seriously and took action in response.


The issue of compliance with regulations aside, it is in the interests of banks to take care to ensure the recording and retention of communications between its employees and its customers that involve committing the bank to potentially onerous contractual obligations. Even where proper contracts are eventually drawn up and signed, disputes can arise over what was said in the period leading up to the agreement. It is increasingly common to see court cases where reliance is made on screenshots of Whatsapp chats as evidence and the outcome is often not ideal. Part of the problem is the perceived casual nature of such communication where the care that normally attends formal correspondence is absent. This leads to unclear messages at best and damning evidence at worst.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.