Adviser Social Media – 3 steps you can take to reduce business risk
There are risks for adviser firms when using social media but taking three simple steps can help mitigate those risks, says Anna Carless, marketing director EMEA for Smarsh
The Financial Conduct Authority (FCA) has also tightened its grip on the governance of social media, stipulating a set of social media and customer communication guidelines for advisers to work within.
Advisers are struggling to interpret the final FCA social media guidance issued in March-‘FG 15/4 Social media and customer communications paper’ – and, more importantly, their related requirements. Not only is misinterpreting the requirements a growing concern for advisers, but how best to engage with and manage social media is also fraught with risks.
One of the biggest risks to adviser firms is the failure to meet the new regulatory requirements and thereby incur a regulatory fine. The FCA has stepped up its enforcement efforts and has levied record levels of fines, making it even more important that advisers understand their responsibilities and know how to take action if any adjustment needs to be made.
The grey areas in the guidance and resulting poor interpretation continues to pose a real threat for businesses. One of the thorniest issues is which social media communications advisers need to capture. The FCA is not insisting every communication should be captured, but only those that constitute a financial promotion. Simple! The challenge is all too often that social media conversations can start as non business-related conversations and quickly move towards financial promotion territory meaning they need to be captured.
Record keeping requirements are also somewhat vague thereby pose a further risk for advisers. According to the rule ‘1.24-6 Approval and Record-keeping’, firms should have an ‘appropriately senior’ member of staff responsible for its systems to ensure all communications (not just financial promotions) are compliant and retained in a system other than the social media platform itself.
Lack of clarity within the business regarding the use of corporate versus personal use when it comes to social media. A recent report into electronic communications compliance revealed the biggest concern for UK adviser firms is balancing employee privacy with oversight obligations; 61%, of firms we spoke to were more concerned about this than keeping pace with new and changing regulations – 46%. But whilst guarding against employee privacy is laudable, it is worth advisers bearing in mind that the same governance applies whether a social media communication is made from a personal or a business account.
What steps to take
There are a number of things advisers can do to reduce the risks to their business.
Step one: Advisers need to familiarise themselves with the guidance. As discussed above, the guidance is exactly that – a suggested approach for advisers to follow. There is a wealth of helpful content available for advisers to download and refer to if in doubt.
Step two: Outline a social media strategy to help identify those channels most suited to achieving business goals and agree a plan for targeting each. As part of this it is worth agreeing policies for each channel and training staff to ensure they are au-fait with both the requirements and business policies in relation to those. There is clearly a resource issue here but even for those advisers with less firepower, it is worth investing in a basic level of training.
Step three: Consider a comprehensive archiving and monitoring solution. There are many available and it is worth remembering that the social media platforms themselves will no longer suffice in the new world of guidance. Ensure the system doesn’t flatten social conversation threads into email. Check that it stores the e-communications in native format. Anything other than native format won’t stand up with the regulator. When considering which solution, it is important also to choose one which will not only evolve with your business, but also include additional social media channels as and when they arise.
A comprehensive system can help with retention and supervision of electronic communications across all channels the business uses; email, instant messaging, mobile phones and social media, from one user-interface making it easier to ensure compliance across the breadth of communication channel.
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