Almost half of financial firms reported being examined by regulators in the last 12 months, according to Smarsh’s 2017 Electronic Communications Compliance Survey, and examiners are looking more closely at firms’ communications.
However, although firms have increased their efforts to meet compliance requirements regarding electronic communications with clients, significant gaps remain, the report found.
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After jumping from 27% to 42% last year, the percentage of firms that reported being visited by an examiner in the last 12 months rose to 47% in 2017.
Email was the most requested type of communication from examiners, the survey found, but over half of respondents to Smarsh’s survey said examiners requested website pages.
Social media communications are increasingly more likely to be on examiners’ radar. Just 19% of respondents said examiners requested social media communications. Requests have increased and gotten more specific. In 2017, 44% of respondents said they’d been asked for LinkedIn communications, 27% for Facebook and 21% for Twitter. Six percent of respondents said they’d even been asked for Instagram communications.
Written supervisory procedures are the most commonly requested type of documentation, up 30% over last year. The survey found 58% of respondents said they were asked to provide proof of supervision of electronic communication, up 25%.
Smarsh found that since 2016, the percentage of firms that have archiving or supervising solutions in place for their LinkedIn communications and corporate instant messaging system has increased 35%. Text message supervision has increased 28% and Facebook supervision increased 26%.
“Given the growing breadth, depth and frequency of exams, it is unsurprising that increased scrutiny/enforcement by regulators is a concern for 44% of respondents,” according to the report.
However, 30% of firms in 2017 said they still don’t have monitoring solutions in place for LinkedIn. A third of respondents said they aren’t monitoring Facebook and 48% have no system in place to archive or supervise text communications.
Over three-quarters of firms have a solution in place to monitor their corporate IM communications, but just 60% are monitoring public IMs.
“Even when supervision is happening, compliance teams must decide where and how to best allocate their finite resources to efficiently and effectively identify and address non-compliant communications and other actions that pose risks to their firms,” according to the report.