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Recapping The Financial Services Forum and Hearsay Social's Social Media and Compliance Event in London

The following post was written by Ellie Kirk of The Financial Services Forum and Anita Moorthy, Head of EMEA Marketing at Hearsay Social. 
The first part of 2015 saw The Financial Services Forum and Hearsay Social collaborate on a project to help educate the financial services industry on social media and compliance best practices. UK event_1
Following a series of interactive breakfast meetings, an industry working group was formed that included senior marketing and compliance decision makers across the UK financial services industry. Later, a social media and compliance best practices guide was presented to the FCA for comment. This culminated in a Social Media and Compliance event on September 24, hosted very aptly at Facebook’s London office where speakers from the FCA, Killik and Co, Shawbrook Bank, Hearsay Social, and others were in attendance.
Below are highlights and key takeaways from the event. Names of individuals were omitted, as the conference was held under the Chatham House Rules.
The Social Media and Compliance half-day event revealed some interesting data: affluent millennials — the most prominent generation at present — are up to five times more likely to seek financial advice via social media than any other generation. This is news that may frighten some financial services providers, whom we acknowledged are known to be late adopters of new technologies. This set the scene for the rest of the day: with more consumers seeking advice on social media, it’s critical that your company is present on social media or risk being left behind.
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This is, in part, why Hearsay Social and The Financial Services Forum teamed up to create a Social Media and Compliance reference document for compliance in financial services, which is in line with the FCA requirements for social media. The team behind the reference document are also creators of the LinkedIn Social Media and Compliance for UK Financial Services Companies, a private group where financial professionals can continue the discussion around compliance and keep an open dialogue amongst peers.
It was clear during the session that not only does it make perfect business sense for financial services companies to adopt social media policies that can be rolled out company-wide, it will become inevitable. With strong audience participation, everybody agreed that financial services companies should embrace social media (as long as they remain compliant)! UK event-image 3
Moreover, the benefits of social media in financial services companies should not be overlooked. From giving a place for start-ups to reach their target audience, to allowing large financial industry players to reach a wider audience, Twitter, Facebook, and LinkedIn can — and should — be used responsibly to help the industry keep the customer at the heart of their businesses.
From the presentations, we learned that the key to using social media successfully is to use it to communicate with customers, not sell to them. Social media allows companies to define their voice, tone, and way of doing things. It’s their chance to position themselves as a friendly and approachable business; not a hard-selling, faceless machine.
Furthermore, while compliance may be daunting for some, it’s important for marketing and compliance teams to work together to drive social media forward in business, including by providing training and mentoring to best educate these teams on new digital technologies. While the framework should be compliant with regulations in the UK, social media as a tool to give a human face to a business should not be ignored. Therefore, it’s more critical than ever that financial services companies don’t get left behind!
To continue the conversation online, join the LinkedIn group for Social Media and Compliance for UK Financial Serv Companies.
To learn more about implementing a compliant social media program in your financial organization, download the Social Media and Compliance Reference Guide.
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The UK's New FCA Guidelines: What It Means for Advisors (Part 2)

shutterstock_137467250This is part 2 of a 2-part series. Read part 1 here.
Best practices for advisers on social media
By including what we consider to be the three vital elements of any best practice social campaign, the FCA guidance provides firms – and other European regulators – with a solid foundation on which to base their own social media policies:
1. Training: The guidance calls for investment in staff training so employees can understand the difference between appropriate and misleading content. This is especially important when employees use the same social media accounts for both business and personal purposes, where the lines between work and play can easily become blurred.
2. Supervision: The guidance covers the need for a robust approval process, ensuring that even the most diligent of adviser’s interactions are always checked and signed off.
3. Recordkeeping: Finally, it provides practical advice on how (and for how long) these campaigns should be archived, so firms can produce an accurate audit trail of how they’ve interacted with every customer.
Work is not done for the FCA
However, the rapid rate of change witnessed in the social media sector means that, to some extent, the FCA is always going to have to play catch-up with what’s happening in practice.  In comparison to equivalent guidelines in the US – which Financial Industry Regulatory Authority FINRA) introduced more than  five years ago, and where social selling in the financial sector is  ahead of the UK – the UK framework does have a few gaps.
The current FCA guidelines could be bolstered by adding more practical examples of both compliant and non-compliant activities.  Real life examples provide vital direction to busy advisers eager to implement campaigns without falling foul of the regulator.  While the framework does include a number of example tweets, posts and images to help advisers ensure their social content is always ‘clear, fair and not misleading,’ there are some omissions.  For example, it remains unclear whether an adviser could compliantly like or share a post from a financial institution without it being perceived as entanglement. Clarity of these points would clear up any lingering confusion and will likely be added to the guidance as the market matures and more use cases emerge.
Neither do the guidelines stipulate the penalties firms could face if their advisers breach these rules.  Nor is there any mention of how the FCA will audit firms to ensure ongoing compliance.  In contrast, FINRA more established guidance takes much more of a ‘carrot and stick’ approach to best practice.  As with the FCA, the carrot comes in the form of an actionable framework that is designed to empower financial advisers to confidently engage with customers over social channels. FINRA’s stick comes with its enforcement capabilities, comprising both auditing powers and penalties for non-compliance.
Final thoughts
It’s clear that the FCA’s framework is a hugely positive development for the industry. It’s increasingly impossible to ignore the potency of social media as a sales channel, and the regulator is making great strides to ensure firms understand exactly what they need to do to maximize this opportunity. Indeed, these guidelines should not be viewed as yet another tick box exercise to ensure compliance. Rather, the FCA has provided much needed tools to help advisers find and engage with a new generation of customers.
However, in my experience, firms are much more likely to continuously invest in the training, processes and systems that ensure best practice – and prevent mis-selling – if they know they could be audited and face penalties.  It will be interesting to see if the FCA toughens up its stance – transforming these guidelines into enforceable rules – as usage of social media by consumers continues to increase and social selling starts to gather real pace in the UK market.
This article was originally published on thewealthnet.
If you are interested in contributing to how social media should be regulated in the UK or in continental Europe, we are interested in hearing from you. Please contact us at EUcompliance@hearsaysocial.com.
Disclaimer: The material available in this article is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of information provided herein.
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The UK's New FCA Guidelines and What It Means for Advisors (Part 1)

This blog post is part 1 of a 2-part series. shutterstock_138153371
Back in mid-March, the FCA (Financial Conduct Authority) finalized its guidance on financial promotions over social media channels. The guidelines, which were the result of extensive engagement and consultation with stakeholders from across the financial services industry, have been designed to provide further clarity to financial advisers which have – until now – had little explicit direction on how to ensure their social media campaigns remain compliant.
The launch of these guidelines is timely. On a macro level, UK consumers are energetic and committed users of Facebook, LinkedIn, Twitter and Google+, with Ofcom estimating that, in 2014, 66 percent of online adults had at least one active social media account. With these users becoming more and more comfortable with brands marketing their services over these platforms – and with a growing population of digital natives who expect to be sold to in this manner – it is not difficult to understand why financial advisers want to leverage social channels. Indeed, many already are. Research undertaken by Intelliflo showed that, as of October 2014, some 58 percent of UK financial advisers were already using social media for business purposes.
But while there’s been a will to promote services over social channels, there hasn’t necessarily been a way; or at least there hasn’t been an officially endorsed one. While the Intelliflo research found that more than half of advisers have already engaged with prospects and customers over social channels, only a quarter of them stated their employers had introduced policies to govern and monitor these activities. This is a worrying mismatch, and suggests that some advisers are engaging with customers and prospects without the checks and balances in place to ensure that they are representing themselves and their firms appropriately across social networks.
The major concern here is that advisers can easily – either unwittingly or on purpose – fall into the trap of mis-selling, bringing their brands into disrepute. The new FCA guidelines will go a long way to clarifying what advisers can and can’t do over social. And while these rules come some time after we’ve seen social selling in practice, the regulator should be commended for recognizing that the complexity of social media marketing means it needs to be treated differently from traditional advertising and marketing campaigns. As the first European regulator to introduce specific rules to cover social media, the FCA could even be described as a trailblazer in its field, and we should expect to see similar moves across the rest of the continent over the coming months.
Check in next week for part 2: Best practices for advisers and what the FCA still needs to do.
This article was originally published on thewealthnet.
Disclaimer: The material available in this article is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of information provided herein.
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UK's FCA Sets New Rules on Social Media Use

shutterstock_79159834The Financial Conduct Authority (FCA), the UK’s regulatory body, recognizes the importance of managing social media in the financial services industry, and has recently published its guidance on using social media for financial promotions. In the UK alone, 58% of financial advisors say they use social media to actively engage with their clients and prospects, compared to 75% of financial advisors in the US sector. According to a social media survey by PAM Insight last year, compliance and regulatory concerns still present one of the biggest barriers to social media adoption among UK advisors. Yet, only a quarter of UK-based financial firms have introduced formal policies setting out social media best practices.
In the new guidance issued on March 13, 2015, the FCA outlines ways in which businesses can use social media for financial promotions in a way that is “clear, fair and not misleading.” The FCA’s acknowledgement that social media can be a significant value to firms in the way people communicate is a testament to the robust financial markets in the UK, the innovative nature of the companies and people, and the active participation by industry regulators.
Here are some important take-aways from the guidance:
1) ‘Click through approach’ and standalone compliance: Consumers’ tweets are standalone promotions and must comply separately with FCA rules, as well as being “clear, fair and not misleading.” This is also the case when tweets are used to link through to a website, known as the ‘click-through approach.’ Firms can apply this rule by having adequate systems in place such that every communication is monitored and supervised. For example, legal disclaimers can be given for each statement that is a financial promotion. These rules apply to all members of the financial firm that communicate “in the course of the business” and not just advisors or agents.
2) Distinguishing between personal and business use: Whether a social media post is compliant or not depends on the content that is being use for professional use, e.g. “in the course of business,” as opposed to personal use. Here are some practical tips for ensuring these requirements are met:

  1. Distinguish between the firm’s own social media sites, and sites for individual officers or employees at the firm. For the firm’s own sites, there should be a clearly defined policy about who is permitted to post material, and with what level of review (before or after the postings).
  2. Some firms only have firm-level social media sites, and prohibit individuals at the firm from making business-related postings on their own social media sites, although this approach is becoming less common.
  3. Firms should clearly distinguish between allowing for their advisors to use business-related sites for work versus their personal sites. For personal, non-business-related sites, advisors typically bar the individual from discussing business on those sites.
  4. Firms should monitor and retain content only on the individual’s business-related sites.

3) Responsibility when sharing or forwarding communications: Unlike other channels, “Retweets,” “likes,” and “shares” can take on a different meaning than the original communication on social media. The FCA declared that if a consumer shares or forwards content via sites like Facebook, LinkedIn, and Twitter, the firm is only responsible for the original communication. In this case, businesses should pre-review or post-monitor the appropriateness of any content. If, on the other hand, the firm is sharing a post that did not originate from the firm AND if the comment endorses the firm or their advisors’ posts that have regulated financial product or service, then sharing or forwarding by the firm will constitute a promotion by the firm. In this case, the firm is responsible for the retweet. The only exception to this rule is where the content is related to “customer service” which is an area that does not fall within the jurisdiction of the FCA.
4) Sign-off for digital communications: The FCA maintains, as it did in its earlier release, that firms have an “adequate system” in place to sign off on all digital media communications which it considers as best practice for managing business risk. Therefore it is important to think through the resource implications of social media. If a firm anticipates having multiple individuals with business-related social media activity, then the firm should make sure that it has adequate supervisory systems and compliance resources to monitor that activity. Firms should also think through crisis scenarios – have a plan in advance for how it would respond in social media in the event of an unexpected negative event/story.
5) Record keeping: To protect a company from legal, regulatory and reputational risk, a key requirement should be that the firm has the ability to retain and retrieve its social media communications, including both content from the advisor or agents, and the responses to that content. While the FCA does not provide specifics on length of time records should be retained, generally it is good practice (as is the case in US) to have a three to five-year retention period for communications with clients and potential clients. Third party technology solutions, such as Hearsay Social, allow firms to archive social media content, and to escalate content to supervisors or compliance for review. Further, with cybersecurity being in the forefront of financial services concerns, it is important to include social media in the firm’s information security program.
The key takeaway for businesses from this recent guidance is that the FCA is committed to providing clear and practical recommendations on how this new channel can be used in businesses to promote products and services in a way that is “clear, fair and not misleading.” However, there remain some challenges, the first of which is how these regulations can keep pace with evolving technology to ensure that guidelines continue to be practical and flexible for businesses. As firms scale and roll out their social media programs to their advisors and begin adhering to these guidelines through training, process, and social media compliant technology, the FCA may periodically revisit these new guidelines to adapt to this changing landscape.
To assist with this challenge and in the interest of creating an on-going dialogue within the industry and with the regulators, Hearsay Social is partnering with the Financial Services Forum to create an industry working group. The working group will provide continual ideas, practical tips and best practices for implementing social media channels in a compliant manner. If you are interested in contributing to how social media should be regulated, in UK or in continental Europe, we are interested in hearing from you. Please contact us at EUcompliance@hearsaysocial.com
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3 strategies to overcome social media challenges in wealth management

Article first appeared on thewealthnet on Tue, Dec 9, 2014.

logoThe wealth management industry has been slow to embrace and understand how to harness the power of social networks in their organizations. However, with a billion people on Facebook and 200 million on Twitter and LinkedIn each, there’s no question that your customers – both young and old – are already there. Clients today expect their advisors to interact more often, to offer them more personalized service and to communicate when and where they want.
A recent 2014 survey by PAM Insight of financial advisors shows that, compared to last year where only 67.9% used Linkedin, this year that number has increased to 83%. The other network that was mentioned was Twitter with 54% having corporate Twitter accounts. The future also seems bright for social media initiatives with over 72% planning to increase spend in the next year.
Hearsay Social recently had the opportunity to dig behind these numbers when it partnered with Financial Services Forum to host a meeting with heads of marketing from some of the largest wealth management firms in UK. A roundtable discussion on the state of social media and the challenges facing this industry brought to light three key challenges and strategies to overcome perceived barriers:

Risk

When it comes to the biggest barriers in adopting social, compliance and risk took center stage. PAM Insight reports that “as with previous year’s survey, 66.7% of advisors stated compliance as the main concern.” But the problem here was less about specific requirements and more about the fact that there is no clarity on what the rules are, which has paralyzed many companies into taking no action.
Recent guidelines from FCA were applauded by the group to be a move in the right direction but there were still a lot of questions on what FCA will and will not accept. There was agreement that the industry can’t wait indefinitely for the rules to be clear, so companies should start by implementing some basic social media strategies:

  • Provide advisors with a pre-approved library of content
  • Enable a workflow to automate content approval
  • Adopt a third-party system to capture social conversations and archive it.

Content

Another area that sparked a lot of conversation amongst the group was content. How do you differentiate your content from your competitors? How do you ensure that your content is not “spam” for your customers? And, more importantly, how do you shape the conversation on social media?
This concern was consistent with PAM Insight’s finding that showed 64.3% of respondents were concerned about lack of control on what content is communicated. After much discussion on this topic, attendees agreed that the best strategy to overcome content issues is education. Education on how to represent yourself online in a manner that is true, trustworthy and personal. Education on the right type of content for the right audience. And education on regulatory risk and social media policies of the company.

Timeliness

Most participants feel that social media moves too fast. If you want to be on social media channels, you need to be prepared to respond in time. Many people spoke about the compliance process and the length of time it takes, often making social conversations less relevant by the time they are ready.
Since introducing any change takes time, it is imperative that companies start now to understand what social media can do for them and take incremental steps to help their people build relationships online. Creating cross-functional teams with marketing, sales and compliance and educating themselves on how social media works are a couple strategies that can help with timeliness and embracing these new channels of communication.
Overall the impact and benefits of social media dominated the conversation. This is again in line with the survey results of PAM Insight. The survey showed that 61% of advisors believed “building industry presence and credibility” was the biggest benefit. While 44% said attracting clients and retention of existing clients (80%) were important benefits of social media.
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Your customers are evolving – change your ways! A message to private banking and wealth management

IMG_8119Hearsay Social was recently invited by The Financial Services Forum to attend an event where Mr. Robert Taylor of UK Financial Conduct Authority (FCA) was addressing the private banking/wealth management industry. Robert Taylor is the Head of Wealth Management and Private Banking Supervision at The Financial Conduct Authority.
The early part of Taylor’s talk focused on how the private banking world has not evolved to where the customers are and where they are going. He spoke about how most companies are still focused on finding and retaining the star relationship manager who the company believes will bring the clients. He cautioned that this model was not generating new clients or new revenue but instead is churning old ones.
To hear other key takeaways from the session, read the full post here.
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FCA proposes new social media rules

Twitter_MagnifyingGlass_FCA_Guidance

In new guidance consultation issued August 6 2014, the Financial Conduct Authority (FCA) aims to clarify the regulator’s approach to social media (prior guidance was published in 2013) and provide guidance for how firms should handle financial promotions through social media communications.

“Our overall approach is that financial promotions, whether on social media or traditional media, should be fair, clear and not misleading,” said Clive Adamson, Director of Supervision at the FCA said. “We have had extensive industry engagement on this issue and we believe our guidance is a sensible approach that doesn’t affect industry’s ability to innovate using new forms of media.”

“We recognise social media are constantly evolving,” said Adamson, “We, therefore, welcome feedback to today’s consultation and look forward to continuing the discussion with industry.”

Standalone compliance is also highlighted in the guidance. Each communication should be reviewed and comply on its own. For example, legal disclaimers should be given for each statement that is a financial promotion. These rules apply to all members of the financial firm that communicate “in the course of the business” and not just advisors or agents.

According to the proposed guidance, firms need to have adequate systems in place to review, approve and supervise financial promotions. In addition, firms should be keeping a record of communications on social media, and they cannot rely on digital media channels (the social networks) to maintain the records because they do not maintain complete records and are often subject to change. To assure compliance, firms can leverage third-party tools, such as a solution like Hearsay Social, to keep records of social media communications.

The guidance addresses challenges with the limited characters (140) available on Twitter, but indicates that the limited space provides no excuse for firms to not make it clear when something is a promotion. In fact, the FCA suggests one way that firms might indicate promotional content is by simply including the hashtag “#ad” in any promotional tweets. The guidance also suggests that firms consider image advertising, however, it advises that firms should not rely on just the image to indicate whether a tweet or message is promotional.
Firms can also address requirements by just tweeting a link to a website with a financial promotion clearly indicated. For example, “To see our current mortgage offers, go to www.fakemortgages.co.uk.”
Overall, it is good to see the regulator addressing the unique nature of social media communications, as it requires different regulatory requirements than more traditional online media. The proposed guidance, “GC14/6 Social media and customer communications: The FCA’s supervisory approach to financial promotions in social media” can be found here.
Comments on to the proposed guidance can be submitted before November 6, 2014 via email to Richard.Lawes@fca.org.uk.
Disclaimer: The material available in this article is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of information provided herein.
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Technology and collaboration key to restoring consumer confidence and trust in financial markets: Recap from the 2014 FINRA Annual Conference

finra stock photoOnce again Hearsay Social was proud to participate in the 2014 FINRA Annual Conference in Washington, D.C.

Regulators from FINRA, the U.S. Securities and Exchange Commission (SEC), and the Financial Conduct Authority (FCA) joined financial leaders from leading organizations including AXA, Wells Fargo, LPL Financial, and Barclays to discuss the evolving economy and financial markets.

In his opening remarks at the conference, Richard Ketchum (Chairman and CEO, FINRA) echoed the same themes discussed at the SIFMA Compliance and Legal Society event in Orlando earlier this year: namely, the need to restore investor confidence and trust in the securities industry.

Furthermore, the Economic Confidence Index (ECI), which averages how Americans rate current economic conditions with their expectations for the future, shows that things are not improving quickly. One in five Americans graded the U.S. economy as weak, according to recent figures, while 34 percent rated it as poor. Additionally, while 39 percent of Americans said the economy is improving, another 56 percent said it is getting worse. Although the markets have recovered, people haven’t.

That’s hard to believe considering that it’s been seven years since the credit crisis affected housing markets and six years since the 2008 market plunge. The last market collapse, however, is still vivid in our collective memories, creating a crisis of confidence among investors.

How are we to turn the tide, and what is the prescribed solution to restore trust in the securities market? The answer may lie in embracing new technology and collaboration.

The new age of regulation puts the investor first, and FINRA is determined to be a key engine in restoring trust in the securities markets. According to Ketchum, today FINRA’s risk-based exam program is more data-driven: they are collecting more information electronically weeks before a scheduled exam and using available technology to better manage and analyze the data.

Using a Risk Control Assessment (RCA) and regulatory intelligence in the “High Risk Broker Program,” FINRA is speeding up and improving the efficiency of its exams. To improve and promote investor confidence, FINRA focuses on a strong set of organizing principles:

  • To be data informed,
  • To be technology empowered,
  • To be responsive to change, and
  • To be capable of more quickly and effectively identifying and disciplining bad actions.

The Comprehensive Automated Risk Data System (CARDS) is an important next step to fulfill these principles and is designed to provide swift and responsive action.

“With the technologies that are now available to us,” explained Ketchum, “we can do things to transform our exam program in ways that haven’t been available to us before. And frankly, it would be unconscionable not to embrace these technological advancements to better fulfill our investor protection and market integrity mission.”

That said, the collection and management of data to identify trends and possible risks has been met with controversy and concerns regarding, costs, control and the security of such a large database. FINRA received approximately 800 comment letters about it.

Despite the controversy, it’s a step in the right direction for FINRA to be using the most advanced technology solutions, investing resources, staff, and time to restore investor confidence and trust in the markets.

I believe Ketchum when he says that they value member firm engagement and that their message and outreach for feedback is genuine and driven to “get it right.” I also believe that social media and networking activities by member firms will play a much larger role in improving and restoring the confidence that has been lost. Social is built on the core principles of authenticity and transparency–values that are key to rebuilding trust. A connected and trusted advisor is one that is open to share and provide guidance in times of uncertainty, helping clients navigate their financial resources to meet their objectives.

FINRA cannot do it alone, however, and it will require the collaboration and partnership of member firms and evolving technologies to get it right. As Ketchum states in the conclusion of his keynote presentation, “Our interests are aligned, and putting the investor first is a goal we should have in common. The investing public deserves nothing less.”

I agree.
Read Ketchum’s full comments from the FINRA Annual Conference and learn more: