What You Should Know About Compliance in Financial Services

Byzantine: something so complex that the average person can’t understand it.

Byzantine is the perfect way to describe many of the rules and regulations put out each year by various federal and state regulatory agencies. The financial industry, which includes banking, insurance and real estate, is right at the epicenter of regulatory oversite thanks to the Dodd-Frank Wall Street Reform Act and the formation of the Consumer Financial Protection Bureau (CFPB).

Advertising and consumer protection are two hot button” areas for government regulators. New technologies such as social media and mobile devices have blurred the lines compared with the times in the past when radio and newspapers were the primary form of advertisement and face to face was the only way to communicate with a customer or prospect.

Compliance is a serious topic that when ignored has led to companies being assessed with large fines and additional reporting burdens. This doesn’t just start and end at the doors to company headquarters. While it is relatively easy to keep tabs on content pushed out by a single corporate communications team it’s not so easy when you have thousands of independent brokers and agents each trying new tactics to attract prospects.

For companies with a network of brokers agents or franchisees systems are needed to monitor how these partners are using the brand online and systems are needed that can take action when necessary. In fact as an example the FDIC has issued FIL-56-2013 Social Media: Consumer Compliance Risk Management Guidance which states:

“A financial institution should have a risk management program that allows it to identify measure monitor and control the risks related to social media. The size and complexity of the risk management program should be commensurate with the breadth of the financial institution’s involvement in this medium.”

While MarkMonitor is not expert in financial regulation we are experts in finding brand abuse online. How someone defines “brand abuse” depends on their particular industry company and role.

If you are a manufacturer then brand abuse would likely include websites as well as marketplace listings that feature counterfeit versions of your products.

If you are in the financial industry and you focus on compliance you might define brand abuse as independent brokers or agents registering domain names that contain the name of your brand or publishing unauthorized web pages that can get your company in hot water with federal or state regulators. Or you might find potential risk for your company among the thousands of social media profiles published by your independent agents.

Whatever your specific compliance hurdles when you are dealing with thousands of independent operators who are using your brand online just as the FDIC mentions above you should have a risk management program in place and a technology that can identify measure monitor and control the risks.

In addition to monitoring for potential abuse you also need a well-planned educational program to address potential trouble areas. This education program should cover all of the areas where independent brokers dealers agents or franchisees fall foul of the law if they don’t follow your compliance guidelines. These areas include Privacy Statements Disclosures Endorsements email SPAM and proper use of Trademarks and Copyrights.

Finally a compliance team needs some way to take corrective action. Companies need an escalation strategy that allows for increasingly severe punitive actions if necessary. If you have an independent agent or broker who is refusing to follow your compliance guidelines they can put your company at risk for greater fines and penalties. You need to locate these potential issues quickly and take appropriate action… before government regulators do!

Hopefully you will be able to navigate the thicket of Byzantine regulations in a way that satisfies the regulators your independent agent and partners and deliver customer satisfaction.

To hear more about this topic click here to listen to the recording of a recent webinar where I address these issues in more detail.