Survey reveals continued pain points for electronic communications compliance
John Davis and Sean McMahon
October 17, 2018

Financial services firms are struggling to keep up with modern channels of communication and incorporate these channels into retention and supervision frameworks. Mobile communications, including text messages and social media platforms like LinkedIn, Twitter, and Facebook, pose a particular challenge for compliance offices. Those are two of the key findings from a survey of financial services compliance departments conducted by Smarsh.

Fifty percent of survey respondents said capture of non-email communications is a top concern. These include messaging via social media, collaboration platforms and text messaging. Managing the use of mobile devices by the workforce and for customer interactions was also cited as a challenge.

Almost 60% of survey respondents cited SMS/text messaging a primary compliance risk. Respondents acknowledged the risks posed by text and instant messaging while admitting little supervision existed for these channels currently. Forty-eight percent of respondents at firms that permit text messaging said no archiving/supervision system was in place. For corporate instant messaging on collaboration platforms, the compliance and retention gap grew by 7% to 31% between 2017 and 2018.

“This year’s survey reveals that firms are focusing too much energy on older technologies and not enough time on the mobile and social communication channels that are growing in popularity among their customers and their advisors,” said Marianna Shafir, corporate counsel and regulatory advisor at Smarsh. “Many don’t have archiving solutions in place for the retention and oversight of modern communications channels, such as text messages, which causes problems and significant risk when facing a regulatory examination, open records request, an investigation, e-discovery event or litigation.”

Respondents found that banning communication channels has not been an effective strategy, with only 44% of respondents from firms that ban text messaging saying they were confident the efforts could be demonstrated to work. Compliance professionals also indicated little confidence in their ability to properly manage and monitor communications on LinkedIn, Twitter, and Facebook.

The survey, Smarsh’s 2018 Electronic Communications Compliance Survey Report, was conducted in February and March 2018, capturing responses from 191 people who work in financial services compliance whose jobs included supervision responsibilities. Respondents include a range of roles, from top executives to department staff members.