Unfortunately, recent experience suggests that these regulations may be some time coming. In the US, the FDA has been promising to release their position on the use of social media in the Pharmaceutical industry for some time, but so far have only announced a series of six month postponements while they wrangle with this complex topic.

For their part, the FCC has recently asked some members of the investment industry to submit their social media policies to prepare for an industry review, but are still a far way off from delivering their own guidance on social media.
While this lack of clarity will continue to cause some uncertainty in the market, it does not excuse a ‘wait and see’ approach to social media. Banks must forge ahead regardless; there is a far greater risk in doing nothing at all.

So, for the time being at least, banks will need to look to existing regulations to interpret how the exchange and retention of information across social media should be governed. This will require a stringent review of regulatory guidelines to identify any areas that touch on the issue of representation, and a re-examination of policies to ensure they can stand up to the demands of social media.
Banking executives will also want to take a closer look at how marketing activities – in particular – are adhering to compliance requirements. The simple truth is that most social media conversations between banks and their customers are now being driven and maintained by marketing departments and the agencies with which they may contract these services, yet most of these marketing departments have not properly updated their compliance frameworks to reflect the very different characteristics of social media (fast response time, total transparency, data discoverability, varied audiences, etc).

Articulating the rules and training the workforce on social media compliance will also be critical, particularly where employee’s social profiles are linked to the bank. For example, by retweeting or liking an article on investment opportunities in LinkedIn or Facebook, employees may be seen as ‘providing investment advice’ by regulators and therefore be subject to compliance review.
Clearly, social media will demand banks to take a new perspective on governance. But it may not require wholesale change; in many ways, current governance frameworks largely apply. Individuals will still need to be verified as customers for advice to be provided; marketers will still need to comply with advertising guidelines for financial services; data will still need to be appropriately safeguarded.

The real problem facing banks is time. Given the rapid pace of change already underway in social channels, banks will need to move quickly to develop appropriate frameworks that not only comply with existing regulations, but also provide a level of flexibility to reflect the constantly evolving nature of social media.
For any bank that is already participating in social media, there is no time to waste. The time to revisit your compliance framework is now.