Top 3 Electronic Communications Compliance Predictions for 2015

Several regulatory developments, guidance updates, and digital trends related to electronic communications and compliance surfaced in 2014, with firms moving quickly to keep pace.

There were increased regulatory enforcement actions across a variety of industries and geographies, and in many scenarios electronic communication records retention and supervision played a role. The SEC hit an all-time high in the number of enforcement actions and fines levied, the UK’s FCA fines rocketed to over $1 billion, and the CFPB heavily fined mortgage lenders that didn’t comply with industry and federal government rules. (Ironically, the federal government also came under fire when several of its agencies lost or didn’t retain some of their electronic communication records).

We saw electronic communications platforms including social media and instant messaging continue to gain acceptance, even in highly regulated industries. Our annual Smarsh electronic communications compliance survey showed the number of digital channels that financial firms allow employees to use for business purposes has almost doubled in the past three years, from an average of 3.6 channels in 2011 to 6.7 in 2014.

What will 2015 bring? Based on experience with regulators, technology trends, and our clients, here are three electronic communications compliance predictions for 2015.

1.  Financial services firms take a plunge in the deep end of the social media ‘pool.’

Historically, firms remained wary of using social media, or allowed only the most popular networks, because they couldn’t all be preserved and supervised for regulatory compliance purposes.

However, last year we saw a shift in acceptance of electronic communications (beyond email and the most popular social media networks) because the increased availability of archiving technology for various content types makes it easier to adopt them. For compliance teams, archiving technology reduces the time and energy spent on supervising email and new electronic communications content types.

In 2015, more firms will look for technology solutions that allow them to manageseveral electronic communications channels in one place, eliminating the need to maintain different archiving systems, which can quickly add complexity. It won’t be unusual to see firms effectively capture and supervise social media, enterprise social media (like Salesforce1 Chatter), mobile messaging, and website communications from one platform.

2. Companies will take a more collaborative approach to electronic communications risk.

In 2015, a more unified approach to electronic communications risk will help put compliance in the spotlight, and compliance professionals will move toward becoming a core part of an enterprise-wide, cross-functional team that manages overall corporate risk and security. As a result, compliance teams will work more with IT, legal, security and the c-suite to evaluate and supervise electronic communications channels, their specific use cases, and areas of regulatory, legal, or corporate risk.

3. We’ll see more industry regulations and increased enforcement related to electronic communications across different industries and geographies.

Last year, the mortgage industry was introduced to new social media regulations by the CFPB (part of the FFIEC), and the FCA released its draft social media guidance for UK financial services firms.

While each industry has its own rules, the common thread is that regulators are watching companies (and their electronic communications) more closely, and enforcement actions will likely increase, in line with the trends seen in 2014.

For example, the SEC said it will increase its examination coverage of investment advisors. To this point, Congress recently approved an appropriations bill that increased the SEC budget to $1.5 billion for fiscal year 2015, an increase of $150 million. The SEC said it would use part of the increase to fund the hiring of more investment advisor examiners.

No matter how these predictions play out, one thing is certain: companies with a good data governance structure, sound electronic communications policies and procedures, employee training on electronic communications practices, and a trusted electronic communications archiving solution in place will be better prepared for anything that comes their way in 2015.