Advisers are increasingly turning to social media and mobile devices to engage with clients, but a lack of confidence with archiving these interactions is putting them at regulatory risk, according to new research.
Archiving and compliance firm Smarsh questioned more than 100 financial services firms - 16 per cent of whom were advisers - about electronic communications from March to June this year.
The findings suggested that UK firms as a whole have realised that social media enables better business, and allows for the use of channels like LinkedIn (72 per cent), Twitter (60 per cent) and SMS/text messaging (56 per cent) for business communication.
The research also showed that if a firm allows a channel, it has generally set a policy governing its use, something important from a regulatory perspective.
Last month, Tenet distribution and development director Helen Turner told FTAdviser that the Financial Conduct authority views social media as any other type of communication, with SimplyBiz’s marketing director Richard Ardron suggesting that advisers must use the same sign-off and record-keeping requirements that apply to print, broadcast and outdoor media.
Smarsh’s report stated that while UK companies excel at allowing workers to select communication channels, they have failed to implement archiving and supervision systems in every case and could be storing up a regulatory headache for the future.
Half of those companies surveyed do not have archiving solutions in place for mainstream social media channels such as LinkedIn (58 per cent) and Twitter (56 per cent), or for mobile/SMS text messaging (58 per cent).
James Thompson, regional director Smarsh UK, commented: “In today’s heightened regulatory environment, it is concerning that UK financial firms appear to be maintaining a ‘tick-box’ approach to compliance.
“Without adequate archiving and supervision strategies in place, firms expose themselves to tremendous risk.
“Our research shows an alarming disjoint between firms understanding their (electronic communication) compliance requirements and implementing the systems to enforce and support these.”
Earlier this year, the regulator produced its own paper on social media which put in place stringent rules for keeping a record of and monitoring posts made on social media.
According to the watchdog, sign-off of “digital communications” should be by a person of appropriate competence and seniority within the organisation. Firms were also told that they need to keep adequate records of any “significant communications”.
The FCA requires firms to efficiently produce requested data, including e-communications during any examination.
The Smarsh report highlighted that businesses lack confidence in their ability to produce requested information in a reasonable time frame, with factors contributing to this lack of confidence including a lack of staff resources (55 per cent) and lack of familiarity with the archiving and supervision technology (48 per cent).
In terms of concerns about e-communications, new and changing regulations came top with 46 per cent, followed by increased regulatory scrutiny with 44 per cent and dealing with new e-communication channels at 39 per cent.
peter.walker@ft.com
