Dawn of a new social era for financial services?
Earlier this month changes were made to the way UK financial services are regulated. The FSA is a thing of the past; making way for the Financial Conduct Authority (FCA), an independent agency supervising UK financial services. The purpose of this was to create a more forward-looking system for financial regulation.
Already, Martin Wheatley, head of the FCA, has addressed the issue of how FCA intends to use social media. In the past, regulators have relied on regulatory reports from organisations themselves. Now, the FCA intends to look at a series of external sources, including social media. It’s been suggested the FCA will have two main purposes for monitoring social networks:
Illegal promotional activity
As companies put digital at the heart of their activity, monitoring digital channels such as social media becomes paramount. Although strict regulations have caused financial services to be slow at adopting social media, some organisations are starting to dip their toes into the social media pool. This makes it essential for regulators to monitor these channels to ensure financial organisations are using social media in ways which don’t mislead customers.
In many industries social media helps organisations understand trends in the marketplace with regard to competitor activity and customer needs. Financial services is no different. The real time nature of social media makes it a powerful tool for monitoring market sentiment and trends; and can help give early warning signals as to when larger scandals may be emerging within the industry.
But what does the increased focus on social media by the FCA mean for the industry? Some might say it could deter financial services organisations further – with the FCA using social media to monitor their actions, they may be put off by increased regulatory pressure on social media. Others may argue that it marks the beginning of a new era for financial services on social media. If the FCA places more emphasis on social media within its strategy, it may encourage the wider financial services industry to make better use of social media.
As the FCA’s new regulatory strategies become more embedded within the industry, it’ll be interesting to see how financial organisations react, and whether the FCA’s use of social media does encourage increased use of social media across the industry.