Regulators Offer Guidance on Social Media Usage

Regulators Offer Guidance on Social Media Usage

The Federal Financial Institutions Examination Council (FFIEC) published industry-wide guidance on social media practices for the financial industry.

In publishing the guidance, the FFIEC intended to "help financial institutions understand and successfully manage risks in this area." This guidance, titled "Social Media: Consumer Compliance Risk Management Guidance,” was adopted by numerous organizations, including the CFPB.

Social media, considered by the FFIEC, are "interactive" platforms -- not including text messaging or email -- that range from more traditional social networking websites, like Facebook, Twitter or LinkedIn, to video platforms like YouTube, and social gaming, including FarmVille, the example given in the guidance.

An overarching concern presented in the guidance was that of consumer privacy. Social media platforms can be transparent, leaving conversations open to the general public. In some cases, this could lead to compliance issues for companies, given the "less secure environment," the FFIEC explained.

However, by enacting policies and procedures that reflect the financial institution’s social media usage, as well as training it’s team of professionals, companies will find social media a very beneficial add to its marketing and advertising operations.


Create a Thorough Social Media Policy

The FFIEC’s guidance said that financial institutions should create a thorough social media policy reflective of their usage. The guidance outlined potential risks that could arise from social media, including employees' uses of these platforms, privacy concerns, and working with third parties.

Drafting a comprehensive social media policy that's fitting to the institution's usage should be done in collaboration with the compliance, legal, human resources, marketing, information technology, and executive departments to ensure a well-rounded policy.

To complement the actions of putting a social media policy in place, professionals should be trained on correct uses of these platforms when representing the company in any context, the guidance explained.

For the lenders that want to continue growing and doing business, it’s critical to have social media policies and procedures in place that abide by current industry regulations.

The step afterward should always be educating your sales, marketing and compliance teams on those policies and procedures, because actions like the use of social media by mortgage companies comes under strict scrutiny from regulators.

The Real Estate Settlement Procedures Act (RESPA) has blanketed over the industry and its tools to ensure that consumers aren't being taken advantage of financially through illicit business practices.

The CFPB has been diligent in its actions to find RESPA violations, targeting not just the big banks, but also individual brokers, agents and real estate builders, because there have been trends in violations, mostly surrounding marketing service agreements (MSAs), but elsewhere too.

Worth mentioning, regulators search actively for keywords on social media, most notably for the term “referral.”

By putting each marketer and loan officer through training, this mistake by lenders can be prevented altogether, saving the company from a section 8 violation. However, training goes deeper than simply telling originators what they can and cannot post, share or tweet.

It’s also going to help provide assurance on actions that can be taken with third parties, whether for a co-marketing campaign or simply connecting with Realtor® through these networks.

Procedures to be included within the policy should also cover concerns over privacy, particularly regarding conversations and inquiries through these transparent websites. This is crucial in the mortgage industry, being that confidential information is handled daily.    

After a strong social media policy is implemented, lenders must stay diligent in its monitoring of different channels to help reduce potential risk and ensure everything runs compliantly and in line with brand standards.


The Benefits to Mortgage Lenders From Social Media

Working with consumers and engaging with partners on social media gives mortgage lenders a low-cost way to humanize their brands in ways other media don't allow for.

Almost 70 percent of consumers reach out to companies through social media for servicing. Notably, the millennial generation is more likely to look to those accounts for servicing, than they are for marketing.

By having open conversations on your Twitter timeline or responding to Facebook comments, it shows others how you approach business, how you treat clients, and the types of services you provide through an endless cycle of your branded content.

It's effective to reach consumers in an environment that they're familiar with, and also prefer working in, and even more so compared to the many layers of a company's communication methods.

Instead of placing a call, reaching an automated machine and pressing a dozen buttons before reaching an actual representative, your clients will simply reach out to you about questions they have, at which time you can share a blog post with them or directing them to resources that answer their questions.

On the other side, co-marketers use these channels to scout for top-producing loan officers with whom they would like to do business. They're likely looking for industry knowledge and awareness, but they also want to see how their clients respond to them, because if clients aren't happy, it's a deal breaker.

The advantages of having prominent social media accounts carries enormous benefits to mortgage lenders, especially when compliance is kept in mind and managed wisely. By know what to post and the best practices of social media use, lenders can see business growth and lead generation in a contemporary way that will resonate with their target clientele.

A well-rounded social media policy can bring that confidence, and ensure everybody uses the platforms in appropriate and compliant ways.


The Takeaway

  • The Federal Financial Institutions Examination Council (FFIEC) provided guidance on social media practices to the financial industry, outlining the potential risks, benefits, and best practices of the media.

  • Regulators suggest implementing a thorough social media strategy that reflects the mortgage company’s usage. After that, each marketer, loan officer, and compliance professional should be educated on the new policies and procedures.

  • Mortgage lenders will see great benefits from being on social media, especially in terms of consumer engagement. Social media platforms have become one of the main communication routes to contact businesses.


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