More than half of UK financial services firms at risk of compliance breaches through email, the Web and Instant Message use
…Survey finds 56% of UK financial services companies are unable to manage and monitor employees’ electronic communications…
22 January 2004 – More than half of UK financial services companies are at risk of unknowingly breaching industry regulations thanks to unmonitored employee use of email, according to independent research commissioned by Orchestria, a provider of real-time visibility and control solutions for email, the Web, Instant Messaging and other electronic communications.
The survey of 100 banks and financial services providers found that 56 per cent of respondents have no technology in place to manage and monitor the content and context of employee emails, webmail and instant messages. Compliance officers in these companies have no way of knowing when an employee is sending a communication that breaches regulations like the Financial Services Authority (FSA) Code of Conduct, leaving the companies wide open to regulators’ fines, or worse.
With email and Instant Messaging surging in popularity as business communications tools, there is some evidence that financial services providers are aware of the need to manage and monitor employee use of these channels. Still less than half of those who do not have a system in place - 22 per cent of respondents – are planning to implement technology for routine email compliance monitoring. A further 14 per cent are looking to buy more technology to boost their existing email monitoring software, in order to mitigate the risk of non-compliance with ever-tightening regulations.
Pete Malcolm, chief executive officer, Orchestria said: “In a highly regulated industry like financial services, it is a huge risk to have employees conduct business conversations and transactions in a completely unmonitored way. Compliance and risk officers need to be aware of the danger of unstructured communications and put the necessary systems in place to reduce the risk of employees knowingly or unknowingly committing compliance breaches.”
Orchestria plans to continue this monitoring of the UK marketplace. Meanwhile it has commissioned a parallel survey in the US, where early results indicate that the percentage of financial institutions using technology to ensure compliance over email, the Web and Instant Messaging is significantly higher than in the UK - as expected in a country abounded with laws such as Sarbanes-Oxley and guidelines from regulatory bodies such as the Securities and Exchange Commission (SEC) and the National Association of Securities Dealers (NASD).
The telephone survey was conducted by RP Ltd on behalf of Orchestria in October and November 2003. Of the 100 respondents, 62 per cent were compliance officers or managers, thirty per cent were divisional managers, 6 per cent were CFOs and only four per cent MIS managers. All of the respondents work for UK investment banks, building societies and retail banks overseen by the Financial Services Authority (FSA) and subject to its Code of Market Conduct guidelines.
Key findings from the survey include:
*56% of respondents have no system in place to monitor the use of email, the Web or instant messaging.
*22% are aware of the risk that this presents, and are currently viewing solutions and products to provide this capability.
*22% are already using a bespoke monitoring system designed in-house.
*8% are not looking to add anything to their existing system.
*14% are planning to buy more specific technologies to complement their in-house system.
*2% outsource their email management to a third party.
*2% of compliance officers were unable to say how their company handles and monitors unstructured communications.
Orchestria is the leading innovator in technology that provides unprecedented levels of real-time visibility and control of all electronic communications, including email, the Web and Instant Messaging. This process is known as Active Policy Management (APM).
Orchestria's APM solution dynamically applies specific and explanatory policy at the point of interaction, which means that non-compliant events, such as information boundary breaches, document-sharing violations or inappropriate disclosures are determined and filtered as they occur.
Orchestria APM has been deployed by some of the world's largest corporations, including Wall Street banks, which face an increased regulatory environment since the introduction of legislation such as Basel II, the Sarbanes-Oxley Act (SOX) and SEC/NASD regulations. Its pioneering technology analyses content, context and concepts; enforces corporate policy; lowers risk; eliminates unauthorised data loss and ensures regulatory compliance.
Founded in August 2000, Orchestria has offices in New York and London, and a dedicated development facility based in Taunton, UK. It is a privately held company. More details can be found at www.orchestria.com.
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