This includes those recently outlined by the Financial Conduct Authority regarding social media and customer communications.
The 2015 UK Electronic Communications Compliance Report found UK financial firms recognise and allow the use of social media and mobile messaging as essential business communication channels. But it also reveals that, despite this widespread acceptance of social media, firms are struggling to implement adequate archiving and supervision strategies and systems.
The report shows that half of the businesses canvassed do not have archiving solutions in place for mainstream social media channels such as LinkedIn (58%) and Twitter (56%), or for mobile/SMS text messaging (58%). Smarsh UK believes the findings underline why financial firms need to act quickly to avoid costly lapses in compliance and retention.
Insights from the report, conducted specifically in the UK market for the first time, show that financial firms collectively realise the power of social media and allow the use of channels such as LinkedIn (72%), Twitter (60%) and mobile/SMS text messaging (56%) for business communication. However, almost half (46%) of those businesses surveyed revealed the new and changing regulations were a growing concern in terms of electronic message compliance. Businesses also cited the increased regulatory scrutiny (44%) and their ability to deal with emerging e-communication channels (39%) as challenging.
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. The reality is that the cost of non-compliance extends far beyond a regulatory fine. It is also associated with reputational damage, can impact new business, and erode customers’ and investors’ trust."
The FCA requires firms to efficiently produce requested data, including e-communications during any examination. The Smarsh UK report highlights that businesses lack confidence in their ability to produce requested information in a reasonable time frame. Factors contributing to this lack of confidence include a lack of staff resources (55%) and lack of familiarity with the archiving and supervision technology (48%).
Fortunately, the report also highlights that UK financial firms do place real value on message supervision. Almost four fifths (79%) of firms surveyed said the ability to supervise messages delivers valuable insights to the business and 85% cited it as a critical tool to identify risk within their business. However, over three quarters (76%) stated it is now more complex than ever to do.
Thompson concluded:
"The recent final guidance from the Financial Conduct Authority, FG15/4: Social media and customer communications requires firms to have a system in place to retain social media communications. Businesses cannot rely on the social media platforms to do this. This increased regulatory scrutiny, coupled with the proliferation of unsupervised content, puts firms at a crossroads. Whilst firms are starting to embrace the new regulations, they have a long way to go to mitigate risk and act compliantly across all their practices."
