Compliance &Ethics - Society of Corporate Compliance and Ethics

Compliance & Ethics Professional May/June 2013guidance directly addresses the complianceand legal risks posed by social media withregard to deposit and lending products, paymentsystems, anti-money laundering, andfinancial privacy. The regulation of an activesocial media presence clearly reflects theconsumer protection best practices that anorganization would apply to its other outboundchannels, including print, television,and radio marketing, as well as authorizedcorporate communications.Reputational risksThe portion of the proposed guidance that Ifound even more insightful was the reputationrisk topics the FFIEC chose to explicitlyconsider. Some executivesoffer the opinionthat if their organizationsdon’t activelyfoster a social mediaidentity, then theneed for social mediagovernance is eliminated.The FFIECinstead acknowledgesthat even an organizationthat chooses for forgo promoting anactive social media presence is subject to therisks that can be thrust upon an organizationby the public. Noting that reputationalrisk arises from negative public opinion, theproposed guidance delves into the realm ofdissatisfied consumers and negative publicitythat can cause significant harm to a lawabidingfinancial institution. In addition tofraud and brand identity and third-party concerns,the FFIEC directly addresses a financialinstitution’s affirmative obligation to monitorconsumer complaints and inquiries initiatedvia social media.In an economy overflowing with consumersclamoring to ensure that “there’s an appfor that,” financial institutions have workedThis proposed guidance…is going to eventuallybecome part of yourprudential regulator’sexamination process.actively to develop social media channelsto harness consumer demand to varyingdegrees. Additionally, those same consumerswho routinely update their social networks(both personal and professional) from theirsmartphones while waiting for the train orpurchasing a latte, will also launch a Twitterrant or a scathing and aptly-named blogpost about your organization before they’veleft your premises. This proposed guidance,which will likely receive many commentsbefore being issued in its final form, is goingto eventually become part of your prudentialregulator’s examination process. A “prudentialregulator” refers to the respective financialinstitution regulators for each category ofentity (i.e., NCUAfor credit unions,OCC for federalbanks). The FFIEC iscomposed of the prudentialregulators.I would proposethat now is the time toaddress your organization’ssocial mediagovernance process.Working with your board of directors and yoursenior leadership colleagues, you can assess thecurrent status of your policies and procedures,identify and address perceived gaps, and provideappropriate guidance to your employeesbefore the regulators arrive to test your practices.Action now will likely ensure that yourregulator hits the “Like” button later. ✵Cris Mattoon (CQMattoon@aaamichigan.com) is Corporate ComplianceProgram Manager with The Auto Club Group in Dearborn, MI.1. The FFIEC is composed of the Office of the Comptroller of theCurrency (OCC), the Federal Reserve Board of Governors, theFederal Deposit Insurance Corp (FDIC), the National Credit UnionAdministration (NCUA), the Consumer Financial Protection Bureau(CFPB) and the State Liaison Committee. Together, these are knownas “the Agencies.”2. Federal Financial Institutions Examination Council [Docket No.FFIEC-2013-0001]: “Social Media: Consumer Compliance RiskManagement Guidance” Available at http://www.ffiec.gov/press/Doc/FFIEC%20social%20media%20guidelines%20FR%20Notice.pdf70 www.corporatecompliance.org +1 952 933 4977 or 888 277 4977