Your firm almost certainly has a social media strategy. But do you ever consider the risks this poses to your business?
Here we look at the compliance hazards, and how you can tackle them.
What risks does social media pose?
As a compliance professional, there are two aspects to social media risk:
- The risks posed by sharing corporate information and views on a fast-moving, interactive platform. These are the reputational risks shared by any firm using this approach
- The potential for regulatory breaches as a result of your approach – risks specific to firms regulated by, for instance, the Financial Conduct Authority
Here we look at both and the steps you can take to mitigate them. With an article this week claiming that 59% of companies don’t carry out any form of social media risk assessment, it’s an area you probably need to address.
What is the reputational risk from social media?
Platforms like Twitter and Linkedin are – by their nature – real time and interactive. It is – in the words of the article – ‘the unpredictability and speed at which reputational damage can spread on social media’ that poses the problem.
Whether it’s someone complaining on Twitter about your customer service or a former employee being uncomplimentary about your firm on Linkedin – do you have a proactive strategy in place in case the worst happens?
If you deal with it promptly and impressively, a negative incident can be minimised. In some cases, the way a company has responded to an online disaster has actually enhanced its reputation.
But for this to happen, you need a plan. A plan that can be swiftly executed. Failure to do so can result in lost sales and a severely damaged share value.
Clearly, in this scenario, much of the risk is out of your control. Social media negativity often originates from outside your firm. But there are steps you can take to minimise the reputational risk of your strategy:
1. Have a clear and documented social media policy
Having a clear policy is essential. It should set out:
- Who can post on your firm’s behalf
- What they are allowed to say (and what they should steer clear of)
- Frequency of posting
- Firm ‘house views’ on key topics
As well as covering any corporate accounts, the policy should address how you expect employees to act on any personal accounts. Is talking negatively about the firm banned? Are people allowed to share corporate content on their personal accounts?
Creating a social media style guide can help you to educate the firm on approach, writing style and allowed content.
2. Train the people responsible for your social media presence
Make sure that anyone authorised to post on behalf of the firm has had sufficient training. They need to understand your corporate rules around content, and have an appreciation of any regulatory limitations.
Set up a training programme, and make it compulsory for anyone who has access to represent the firm on social media.
3. Is social media the best channel?
Most firms are keen to be active on social media. But Twitter, Linkedin or Facebook will not always be the best channel for the message you want to convey.
Their immediacy and limited characters do not always represent the right choice. Don’t assume everything has to be shared online in this way. Sometimes – particularly for complex or nuanced messages – another channel might be better.
What are the regulatory risks from social media?
If you’re a regulated firm, the risks go beyond reputation. The FCA has firm rules on social media activity. Because it regards posts on Twitter, Linkedin and other platforms as ‘non-real time’ promotions, they need to comply with financial promotions rules. This makes them as heavily regulated as brochures, adverts or website content.
1. Follow ‘fair, clear and not misleading’ rules
The FCA dictates that financial promotions should be ‘fair, clear and not misleading’.
In a social media setting, this can be tricky. You are limited as to how many characters you can use, so any complex messages can be difficult to convey.
You can minimise this risk by working with your Marketing, Sales or any other teams who post content. Help them to understand how their posts can meet the FCA’s requirements. Doing this will minimise the amount of posts you have to reject, getting them online faster – as well as reducing the risk of non-compliant wording slipping through the net.
2. Understand the rules on risk warnings
The FCA last updated its social media guidance in March 2015. One of the new rules introduced then related to risk warnings, which the FCA now says apply to social media in the same way as they do to any other promotion.
Working with your Marketing team on what constitutes a compliant approach is one way your team can reduce risk here. The FCA guidance has some examples of tweets that would be compliant and non-compliant.
3. Ensure posts are Compliance-approved
One thing that marketers and others often don’t realise is that tweets and posts need the same Compliance team sign off as any other materials.
This approval needs to be managed – and documented – with as much rigour as approvals for printed materials.
Your business needs to allow for Compliance team review in their publishing schedule. This can feel contrary to the immediate, reactive nature of social media – but it’s essential.
You can still get posts out quickly, though, if your approval processes are as efficient as possible. Our 6 proven ways to make your approval process better has some good tips on this. Introducing a degree of automation to the compliance review process can help to make it faster and more robust.
4. Watch out for hashtags
The 2015 guidance from the FCA sounds a note of caution on hashtags. Previously, the word #Ad had been suggested to signify promotional tweets.
The updated guidance changed this. It also discourages the use of any hashtag that might lead to confusion over the source of a tweet. You will need to be familiar with the rules so you can explain them to your business.
5. Retweeting, sharing and liking can constitute a promotion
The 2015 guidance also made it clear that the FCA might consider a retweet, share, favourite or like as a financial promotion from your firm. You therefore need to be careful when endorsing a tweet in this way.
6. You need to follow the rules on compliant record-keeping
Social media is fast-moving, which can lead people to forget that posts need to be documented and archived in the same way as adverts or brochures. You can read more here about how to ensure FCA-compliant record-keeping.
Social media certainly isn’t risk-free, from either a reputational or regulatory perspective. But it is an effective way to reach clients and prospects; to share your thinking and to build relationships.
Follow these steps, and you will go a long way to mitigating the dangers inherent in an active social strategy – enabling you to reap the rewards.
Nothing in this document should be treated as an authoritative statement of the law. Action should not be taken as a result of this document alone. We make no warranty and accept no responsibility for consequences arising from relying on this document.