A majority of compliance teams say texting remains the top source of risk, according to a recent report based on a survey from archiving and compliance firm Smarsh.
The report — “An Unprecedented Era of Enforcement” — takes a look at how financial services firms are responding to changes in digital communications compliance, specifically in the wake of the SEC’s recent crackdown on off-channel communications.
Though 65% of respondents said texting was at the top of their list when it came to content compliance threats, nearly half of respondents said their organization permits texting. The survey also found that 17% of firms allow the use of encrypted apps such as WhatsApp and WeChat.
“Text messaging will continue to be an area of focus,” said Steve Marsh, Smarsh founder and chairman. “If you look at the data we saw in the survey, a little bit less than half of the respondents said that they permit text messaging for business use. And that almost seems a little bit out of touch with reality when you think about just the fact that almost everyone is using text messaging for everything in their lives. It’s not just their personal lives. Business communications are happening over text messaging, whether firms allow it or not.”
Recent SEC fines haven’t motivated everyone to act. Despite 65% of respondents saying that keeping up with compliance is a top policy concern, 29% said they are not reviewing policies following recent off-channel fines.
Additionally, 90% of respondents spend less than a quarter of their time creating or adjusting policies and systems to ensure compliance with new and evolving communications regulations.
The report also found that cybersecurity risks from new channels continue to remain a top concern, increasing from 45% in 2020 to 59% in 2023.
Smarsh surveyed 229 respondents with communication compliance responsibilities for the report. The respondents came from a wide range of businesses, including broker-dealers, RIAs and private equity firms.