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Bank regulator proposes social media guidelines for financial sector

Bank regulator proposes social media guidelines for financial sector

US body to move social media compliance requirements beyond trading

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A US bank regulator has issued a consultation on guidelines for the use of social media by financial sector organisations.

The US Federal Financial Examination Council (FFIEC) has invited comments from financial companies and consumers over a 60 day consultation period, aimed at informing guidance to help financial institutions understand the risks of using social media.

The financial sector currently uses social media for many purposes, such as marketing, providing loan pricing, enabling account applications, or receiving feedback from the public.  Many financial companies have a large social media presence, with the bigger names attracting hundreds of thousands of followers on Twitter, for example.

Regulators have long been concerend about the use of messaging and social media among traders. Recently the use of sentiment and mood analysis and social network analysis to inform stock purchases and automated trading has come under the spotlight, but these new regulatory proposals aim to look at wider issues.

The FFIEC said that financial organisations will be expected to use the guidance to ensure that their policies and procedures provide "oversight and controls" equal to the risks posed by social media strategies. This means that a company which is heavily reliant on its social media presence for business should have a wide ranging strategy on how to deal with the various risks involved.

The consultation mentions that financial companies should, for example, have a staff training programme in place to ensure employees are aware of guidelines for work related accounts.

However, according to a statement from the FFIEC, the guidance will not impose any strict rules that companies must abide by, focusing on assisting in the transition to the use of new tools such as Twitter and Facebook.

"Although the guidance does not impose additional obligations on financial institutions, the FFIEC expects financial institutions to take steps to manage potential risks associated with social media, as they would with any new process or product channel."

The presence of social media in the UK banking sector has also been growing, however a survey showed that many bank customers are unwilling to use social media tools to engage with banking staff.

 

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