Regulator scrutiny: comms strategy for fintechs facing MAS investigations

Regulator scrutiny: comms strategy for fintechs facing MAS investigations

17 November 2021

Regulator scrutiny: comms strategy for fintechs facing MAS investigations

by Laveen Prakasan, Account Manager, Singapore. Laveen specialises in executing, leading and growing PR, corporate and integrated communications. With expertise in content development and thought leadership for the technology, fintech and finance industries.

How fintech firms can manage communications strategy during regulator scrutiny

Here in Singapore, we’re very proud of our burgeoning fintech reputation and status as a wealth and financial hub mostly due to our central bank, the Monetary Authority of Singapore (MAS), and its reputation for marrying stringent regulation with progressive policies.

As Singapore’s fintech sector continues to grow and thrive, our regulator is kept busy protecting its reputation for high quality controls and exemplary operating and reporting regulations.

As such, it’s likely that firms will be investigated from time to time. Which leads many operators to a quandry: how to communicate strategically while MAS is asking questions? Wisely, fintech companies want to protect their reputation and mitigate any potential damage whilst investigations are taking place.

It’s important to take a strategic approach to communications while being seen as transparent and cooperative. The right approach can help fintech firms maintain their reputation during a challenging time, ensuring media, the public, investors and employees maintain a positive regard, despite regulator scrutiny.

Coping with regulator audits

Regulators wield a large amount of power, making them a force to be respected and dealt with carefully. This means that all communications with regulators need to be clear and concise to avoid misinterpretation.

If a company has rapid growth, gains a large amount of funding or cash injections, regulator attention is more likely to appear.

Even for businesses that are extremely careful with their processes, communications and documentation, being scrutinised by regulators can be highly stressful for everyone involved. While a business may have done nothing wrong, the threat of an unknown mistake being found can put employees on high alert.

Reassuring employees, stakeholders and the public is best done by maintaining open and honest communication.

Maintaining strategic communications during the investigation stage

MAS often publishes its current investigations, which may lead to media attention. Trying to avoid public knowledge of the investigation will not only cause tension amongst employees and business leaders, but it will also reflect poorly on the business if it’s found out.

Instead of trying to keep the situation cloaked, companies can use the chance to gain respect by showing transparency. Preparing strategic messaging for internal and external audiences puts the business in charge of the situation rather than reacting to it.

Another mistake is leaving it too late to build a positive relationship with the media. Companies need to have an ongoing PR strategy to maintain media trust. This ensures a decent amount of awareness of the business values, products and expertise. By committing to establishing long-term strong relationships with the media, firms have a level of trust to build on should investigations commence.

Expecting regulator scrutiny and planning for it is the best way to ensure the company’s reputation receives minimal harm. Trying to conduct damage control without a PR campaign already in place is far more difficult.

Why do regulators investigate?

Common situations which trigger regulators to investigate are extremely rapid growth and introducing radical innovation into the existing financial ecosystem. Unlike some countries, Singapore regulators are thorough and less likely to overlook small errors. The strictness of Singapore’s regulators has led to its gaining a reputation as one of the leading and fastest growing financial hubs in the Asia-Pacific region.

FinTech falls under the purview of financial regulators. Their goal is to foster a sound financial services sector through prudential oversight of all financial institutions – banks, insurers, capital market intermediaries, financial advisors, and stock exchanges. Regulators may also be responsible for well-functioning financial markets, sound conduct, and investor education.

Maintaining a clear paper trail is vital to being ready for any possible examinations and passing audits. Companies need to have a solid grasp of the way they operate, what they offer, money they spend, its provenance and the investments they make with it. It is also necessary to stay up to date with the most recent compliance laws and changes to avoid getting caught out.

Establishing a solid messaging strategy

If the first communications the public hears about a business are negative, the damage to the company’s reputation can be difficult to overcome. However, by implementing a carefully planned communications strategy, businesses can build goodwill. This ensures that if an investigation occurs, the public will see beyond any story the media may release. The key is to anticipate a risk of negative media attention and begin taking counter actions before it happens.

Companies don’t need to make loud or widespread announcements about any investigations. There’s no need to shout it from the rooftops. However, messaging should be ready if asked to release a statement or the media make contact with questions about the situation.

Preparing communications for unknown regulator attention can be difficult as the message will depend on the nature of the investigation. Creating a flexible, generic message can be helpful as it may be altered to suit the situation.

Some points to include are:
details of the current situation
commitment to complying and assisting authorities
commitment to upholding the law
being open to revising policies
spokespersons available for comment

Managing internal messaging

When the spotlight of scrutiny is on an organisation, employees become potential whistleblowers. Should they suspect or notice actions that don’t align with company external promises or messaging, they may decide to call it out. Therefore, it’s important to build a strong sense of trust in the company among employees.

When companies are battling to protect a public reputation, internal communications may take a backseat. But on the contrary, it’s a vital element of any crisis management campaign. Any fintech firm facing regulator scrutiny should allocate considerable resources and expertise to understanding employee sentiment and ensuring a solid and fair understanding of current developments.

Staff want to be informed and feel comfortable about the process. Creating a foundation for transparent and honest communications throughout every level of the business is the best way to help employees feel at ease. Naturally, this is a long-term prospect, not to be conducted only during a crisis situation but as part of a sustained internal communications strategy.

The worst-case scenario: a guilty verdict

If a business receives a warning or is found liable it will usually be required to report it within three to seven days. Having a pre-prepared plan to turn to will help ensure the measures are taken well within deadlines, and the wording and tactics undertaken are measured, careful and aligned to a broader company reputational strategy.

By showing an understanding of why it happened and acceptance of the decision or ruling companies may be able to limit the reputational damage. Other steps to keeping public and employee faith are showing a commitment to changing procedures and demonstrating how it won’t happen again. Also communicating how steps are being taken quickly to remedy the problem, such as adding more staff, working closely with regulators, increasing the cybersecurity team or working with external consultants helps to alleviate negative views of the business.

Allocating a spokesperson is imperative but it’s also a wise idea to provide them with extensive media training. Fielding awkward questions and looking relaxed on camera are skills that need practising, so you need someone who is confident on camera, with appropriate seniority in the business and the ability to answer interrogative questions. When media requests for comment arise, taking an open and transparent view is the best course of action.

Regulator scrutiny may be unwanted and uncomfortable but managed carefully it doesn’t have to become a PR disaster and sometimes even provides an opportunity for a company to improve its public image.

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