Compliance teams at financial services firms remain wary of social media's reputational influence, enablement of compliant texting for advisors and adoption of new technologies that assist supervision processes, Hearsay Systems reported Tuesday.
Hearsay, which provides social media compliance solutions, also asked about firms' plans around social media in the next year and found many of them eager to adopt Instagram and YouTube.
"The quantity and complexity of digital communications for financial services have exploded in our hybrid and remote work environments, and compliance teams often lack the resources — both human and machine — to effectively manage this increase in volume," Iain Duke-Richardet, vice president of compliance strategy at Hearsay Systems, said in a statement.
"With compliance team sizes expected to remain steady, technology must be leveraged to carry the weight."
Hearsay's 2021 Finserv Compliance Survey found that financial services firms no longer view social media as a significant compliance risk, but as a reputational one.
Although more than half of financial services firms surveyed reported that they allow Facebook and Twitter and about 90% permit Linkedin, they are less concerned about capturing, monitoring and archiving the data than about the intrinsic risk of being able to adequately supervise the content itself.
Two-thirds of firms said they allow advisors to generate unique content for social media, and 90% of firms pre-approve some or all of this original content, even though regulators have lessened the obligation for such pre-review.
Sixty-three percent of survey respondents reported that they permit texting for business purposes. Hearsay said this indicates that these firms likely have a compliant texting solution in place, and that for these, the solution meets their regulatory requirements with respect to capturing and monitoring that activity.
Responses from firms in the survey that do not allow texting, however, indicate that they view texting as a significant regulatory risk.
Hearsay noted that recent enforcement actions have shown that when firms do not provide a channel for their employees to text compliantly or simply prohibit texting, they take on the burden of ensuring that employees adhere to the policy. It said the measures these firms rely on to defend their policy are costly and complicated.
