Smarsh has released its “2016 Electronic Communications Compliance Survey Report,” which has some surprising conclusions — especially regarding social media compliance.
Major Issues Surrounding Compliance
The study polled 221 financial services professionals that had direct compliance supervision responsibilities. Respondents said that policy, enforcement and retention gaps remain high. This means that firms will be vulnerable to undetected fraud, errors and regulatory penalties, the survey noted.
The professionals responding found that current supervision practices aren’t sufficiently addressing the ongoing evolution of communication in the financial services industry. Most agreed that firms have an immediate need to rethink their approach to the retention and oversight of electronic communications amid a demanding regulatory environment.
Social Media Compliance Officers Are on the Hook
Risks in compliance are everywhere. Supervision of new communication types poses a big challenge: Most firms have been overwhelmed by the sheer volume of email they must review to meet requirements. Not only that, but the resources available to address this issue are growing slowly, if at all.
Communication “outside the compliance perimeter” can be a significant vulnerability. In fact, 48 percent of respondents thought social media was their primary compliance risk. Supervisors had little or no confidence that they could prevent users from using these social media platforms, even if they were forbidden in the workplace.
Messaging Apps Are a Problem
Messaging apps were also an area of great concern to respondents since their use has not been demarcated by the regulators. Without this formal guidance, the report notes, “A full 39 percent of those who allow but don’t archive these messages are waiting for industry regulators to enforce guidance before they will begin archiving text messages.”
Firms are struggling to find viable solutions for these social programs, particularly since existing policies don’t seem to be working. “If procedures designed to identify risk in email are ineffective and waste time, extending those same procedures to additional content only exacerbates those results,” Smarsh said in its report.
“There is a need to rethink the traditional approach to communications supervision, especially when considering finite resources and the growing strategic role of compliance in organizational risk management.”
Changing the process of regulatory compliance has been exacerbated by the rise of mobility in the workplace, along with the introduction of new and unregulated messaging platforms. Stricter control and organized archiving of employee communications in all forms will be needed in days to come.
Principal, PBC Enterprises
Larry Loeb has written for many of the last century's major "dead tree" computer magazines, having been, among other things, a consulting editor for BYTE mag...