Social media consumer compliance risk management
COMPLIANCE NEWS |
According to the federal regulatory agencies, a financial institution should have a risk management program that allows it to identify, measure, monitor, and control the risks related to social media. To help financial institutions in that endeavor, the Federal Financial Institutions Examination Council issued guidance adopted by the regulatory agencies on Dec. 11, 2013. The guidance addresses the applicability of existing federal consumer protection and compliance laws, regulations, and policies to activities conducted via social media.
As noted in the guidance, components of a risk management program should include the following:
- A governance structure with clear roles and responsibilities whereby the board of directors or senior management direct how using social media contributes to the strategic goals of the institution (for example, through increasing brand awareness, product advertising, or researching new customer bases) and establishes controls and ongoing assessment of risk in social media activities.
- Policies and procedures (either stand-alone or incorporated into other policies and procedures) regarding the use and monitoring of social media and compliance with all applicable consumer protection laws and regulations, and incorporation of guidance as appropriate. Further, policies and procedures should incorporate methodologies to address risks from online postings, edits, replies, and retention.
- A risk management process for selecting and managing third-party relationships in connection with social media.
- An employee training program that incorporates the institution’s policies and procedures for official, work-related use of social media, and potentially for other uses of social media, including defining impermissible activities.
- An oversight process for monitoring information posted to proprietary social media sites administered by the financial institution or a contracted third party.
- Audit and compliance functions to ensure ongoing compliance with internal policies and all applicable laws and regulations, and incorporation of guidance as appropriate.
- Parameters for providing appropriate reporting to the financial institution’s board of directors or senior management that enable periodic evaluation of the effectiveness of the social media program and whether the program is achieving its stated objectives.
The guidance helps financial institutions identify the potential risks associated with social media by listing the laws and regulations that may be relevant to a financial institution’s social media activities under each of the following risk areas: compliance, legal, operational, and reputation risks. To view the social media guidance, please see: http://www.fdic.gov/news/news/financial/2013/fil13056a.pdf.