Social media sites bring the court of public opinion closer to financial institutions

by. Georgann Smith

The expanded use of social media as a vehicle for communicating with customers has caused financial institutions (FIs) to seek help in understanding the regulatory issues surrounding this still-emerging communications method. Yet, according to panelists at a recent American Banker Regulatory Symposium, FI executives may be able to rely on existing policies, such as those governing online regulatory disclosures, rather than trying to develop totally new policies.

“There is nothing new under the sun,” said Mercedes Kelley Tunstall, a partner at the law firm Ballard Spahr. “Just like you have to disclose online, you have to disclose on social media. You can’t look at this as completely different.”

In January 2013, the Federal Financial Institutions Examination Council (FFIEC) released guidance regarding social media’s place in FI’s risk management systems and compliance. The FFIEC recently released final guidance on this subject for FIs.

Tunstall acknowledged the difficulty FI regulators face in writing risk management policies around FIs’ use of social media.

“Social media is very dynamic. … It’s difficult to put in place guidance when social media is still developing and changing,” Tunstall said. “Regulators don’t want to hamper banks from being able to improve what happens with social media channels as those channels get more mature.”

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