Tips on Creating a Compliant Digital Communications Strategy

The latest research (The Futurewealth Report) shows that digital communications are fast becoming vital for financial services firms (1). Clients are online, and direct forms of communications can speak to them like no other channel, at a fraction of the price. But financial services firms still grapple with the compliance challenges of email marketing and social media, which together make up a digital marketing campaign.

“Financial providers need to get a firm grip on the regulatory requirements and how their compliance departments can help them provide outstanding campaigns that are clear, fair and not misleading to the general public,” says Lee Werrell, managing director, CEI Compliance Ltd.

Regulatory scrutiny

Email marketing is frequently used by asset managers and hedge funds to connect with investors and prospects, but many firms aren’t aware of the specific rules governing these communications, says Paul Das, founder and managing director of ProFundCom.

“In the last year, b2i (business-to-investor) email communication has increased 17%, but I have been alarmed at the number of compliance issues ignored at asset managers and hedge funds,” says Das. “Systems have been implemented that have no compliance functionality - mainly due to the fact that the vendors and the managers are not aware of the compliance issues.”

Here, ProFundCom highlights compliance issues firms should be aware of:

●    The FSA states that a firm must take “reasonable care” to have a control system in place for its e-communications.
●    Records of e-communications, including emails, need to be stored for at least seven years if they relate to certain kinds of business, under Financial Services Authority and Securities and Exchange Commission rules.
●    There is an international quality for email and data security compliance, as laid out in the ISO 27001 Security Management Standard, introduced in 2005.
●    Some web hosts comply with the ISO/IEC 27001 and 27002 standards, which relate to the safety of virtual and physical information.
●    Some hosted email providers run all their clients on a single platform, potentially compromising clients’ data.

For more information go to http://profundcom.net/compliance/

Top social media compliance tips:

Meanwhile, when it comes to social media, firms need to implement the fundamental principles of “clear, fair and not misleading” across the board, says Werrell. They also need to:

●    Know the difference between image advertisement versus financial promotion, as these two types of communications are subject to different rules.
●    Display risk warnings: being limited to 140 characters is no excuse for inadequate risk warnings. The appropriacy of the medium should be considered.
●    Remember that the FSA’s rules cover ALL communications to clients, not just promotional ones.

Together, email marketing and social media are a powerful proposition, but they must be executed well.

"The phenomenal growth of social media combined with email marketing in the UK is still to be tapped by the financial services companies, who are currently only scratching the surface,” says Werrell.

ProFundCom is running a webinar on this topic, featuring Das and Werrell, on 26th February.Click Here for more details

About ProFundCom
ProFundCom is a leading email marketing in finance consultancy designed specifically to support sales and marketing to the financial community. Headquartered in London, the firm works with brokers, hedge funds, large fund managers, wealth management boutiques and asset managers. ProFundCom was founded in 2005 by Paul Das.

(1) The Futurewealth Report: Stepping into the Communication Age, published jointly by SEI, Scorpio Partnership and Standard Chartered Private Bank.

Media contact: Richard Morris: 0208 144 4010
Richard Morris
ProFundCom Ltd
0208 144 4010