FFIEC Guidance and the Great Social Media Debate

February 24, 2014

The Federal Financial Institutions Examination Council (FFIEC), this past December, published a 19-page document detailing practices related to social media. In it, the FFIEC states “the use of social media by a financial institution to attract and interact with customers can impact a financial institution's risk profile. The increased risks can include the risk of harm to consumers, compliance and legal risk, operational risk, and reputation risk. Increased risk can arise from a variety of directions, including poor due diligence, oversight, or control on the part of the financial institution.”
This FFIEC “guidance” has been met with both acceptance and derision. The general concept behind social media and marketing is to get the word out about one’s business/offerings. If there are guidelines that tie an individual’s hands, by definition, that limits the use and helpfulness of social media.
On the other side of the pulpit, many are looking at the FFIEC’s “guidance” as a solid guideline for how to use social media.
“Many loan originators feel like the 19 page social media guidance document published by the FFIEC in Dec. 2013 is a roadblock to prevent mortgage professionals from marketing online or communicating with their clients and referral partners through social media,” said Mark Madsen, VP of online consumer education for Best Rate Referrals. “However, there are no new laws created, only a standardized set of suggested operating procedures that mortgage companies need to put in place for managing risk.”
What seems almost absurd is the notion of pushing “guidance” onto an industry. If a government entity is looking to put pressure or deliver “guidance” on a given subject, the social media structure in this case, all social media outlets should contribute their two cents. The reality is, if an individual wants to spam their business’ Facebook page with nonsense about rates or whatever, they should be allowed to do that. There’s nothing in Facebook’s procedure manual that says that an individual can’t promote their business using whatever terms they can that are outside the law.
“Social media has been such a huge part of my business and it also helps push me to learn about more programs. I know it sounds self-serving, however mortgage bloggers who write about new programs or guideline changes have to stay up with current industry trends,” said Rhonda Porter, senior loan officer with Mortgage Master Service Corporation.
Using social media not only as an education tool for a population is important, but so is spreading the word about one’s current business. Say, for example, an individual posts on Twitter that they were able to provide a loan to a client at a certain rate, giving minor information about the client (age, yearly income), what’s the harm? How is that outside of standard operating procedure?
“As of now, I’m allowed to blog and use social media as a mortgage originator. If this changes, and I’m no longer allowed to use social media as part of my business, then I cannot imagine being an originator,” said Porter.

Compliance, Technology