Risk issues today
Whether you speak to Banks, Asset Managers, Financial Advisers, Wealth Managers, Networks or any other financial firm in between you’ll find, naturally, all are concerned with compliance. This is in regards to the regulatory requirements and confinements of using social media in their business; and of course reputational risk and brand risk, are of key importance. Even if they’re not currently within the regulators guidelines.
At the time of writing this the FSA last published their set of guidelines in June 2010. (http://www.fsa.gov.uk/pages/doing/regulated/promo/pdf/new_media.pdf). The guidance has focused primarily on issues regarding financial promotions, and deems the rules to be media neutral.
Advances in technology and it’s adoption
The progress in social media and advances in technology, including the use of tablets and smart phones, and how the public and businesses interact online since 2010 has changed dramatically.
You only have to take a look at the changes of what happens in an internet minute from 2012 to 2013 across 6 of the Web’s biggest services. That’s happening every 60 seconds.
If the regulator remains only focused on financial promotions it’s ignoring legal risks, reputational and operations risks associated with social media. Including the risks associated with choosing not to participate or monitor what’s being said about your brand.
What’s happening else where?
In the States, the US Federal Financial Institutions Examination Council (FFIEC) has released proposed guidance on the use of social media by financial institutions.
“Accordingly, such institutions are expected to use the Guidance in their efforts to ensure that their risk management and consumer protection practices adequately address consumer compliance and legal risks, as well as related risks, such as reputation and operational risks, raised by activities conducted via social media.” (https://www.ffiec.gov/press/PDF/2013_Dec%20Final%20SMG%20attached%20to%2011Dec13%20press%20release.pdf)
While here in the UK there has been a call to the regulator to address these issues within their guidelines.
“…….we really need some clarity with regards to how employees can engage with social media, and when activities online can amount to criminal activities, such as in relation to copyright infringement,” says Luke Scanlon, a technology lawyer from Pinsent Masons. (http://www.risk.net/operational-risk-and-regulation/news/2240124/fsa-should-develop-social-media-guidance-legal-expert-warns).
In 2010 even if you were aware of these operational and reputational risks, the tools to be able to monitor and manage them were basic at best, and often didn’t exist. But 4 years on and the tools and software has been developed, and is continually evolving, to match these challenges.
What should firms do to protect these risks?
Take a look at the slides (first discovered via @BankersUmbrella) below highlighting the key points from the FFIEC proposed guidance mentioned earlier. They address each point clearly.
All of which you’ll find are covered in the 7 Golden Rules to Successful Social Media Marketing. While the regulators updates might be new, the principles of good social media engagement, monitoring and risk practices are available today and will continue to develop and grow as we look at other industries and within our own to define and improve them.
What are the stumbling blocks that you face with social media? Share with us in the comment section below, we can all learn from sharing the real issues each individual and company faces and how others have overcome those challenges.