Why the Financial Services industry needs to regulate and produce their social media guidelines
Recently an ex London City analyst was fined by the UK’s financial regulatory body, the FSA, for making “misleading and inaccurate market disclosures” that contributed to an unintended reaction in the stock market.
This itself may not make the headlines, but the method of delivery may. The message was sent by instant message (IM) and this is the first case of FSA enforcement action to stem from an IM.
Now, instant messages have been around for a very long time, primarily as an internal communications tool, but one could argue that this was the precursor to the current trend of micro-blogging.
Sadly this highlights two quite contradictory lessons. Firstly, it highlights why the Financial Services industry is so reticent in getting involved in ‘alternative’ types of communications – for all the correct regulatory reasons. And secondly, it highlights that the industry needs to rapidly get to grips with this new form of communication and issue an internal policy about the professional use of it.
FINRA, The US Financial Industry Regulatory Body, issued guidance in January 2010 on blogging and the use of social networking website, and later last year the FSA provided an update following a review into new media channels. However, there is scarce evidence that the industry has embraced these new cheap and easy to use competitive tools, except for banning them.
Tomorrow’s employees will have grown up with this form of communication and it will soon be embedded in every industry. The omission of internal guidelines will only increase the incidents of regulatory breeches, because no one thinks that this will be the last time the FSA has to act.
By Stuart Macaulaycomments powered by Disqus