The dangers of taking business into online social media were recently brought home to a reporter on the Financial Post in Canada when an offline disagreement with a marketing professional turned into a very public online spat, thanks to Twitter, the micro-blogging service. Although the reporter’s colourful tirade was directed at the unlucky individual, the public nature of twitter posts — or tweets — meant that it was picked up by blogs and websites the world over, causing his employer to issue an apology to readers.

Many similar stories of workers making unguarded or unprofessional comments via Twitter underline the danger of using such an open platform for business communication. And, while the promise of reaching new markets and improving communication with existing clients may be tempting, organisations that jump in with both feet risk ending up with egg on their faces.

Unlike other services that fall into the same broad category of social media — including Facebook, MySpace and LinkedIn — interest in Twitter as a business tool is not limited to media organisations, soft-drink producers and fashion brands. Increasingly, solicitors, independent financial advisers and others are tweeting.

Phillip Calvert, founder of the internet-savvy IFA Life, was recently quoted as saying: “Financial advisers who don’t use Twitter . . . will miss out on business leads — it’s as simple as that.” He also pointed to the recent trend of consumers going to social networks to find independent financial advisers and planners, in addition to more traditional channels.

The ability to provide real-time updates, within the constraints of a 140-character tweet, to a wide audience may well provide a competitive advantage in any rapidly changing environment. It may also simply provide a less formal or more personable way by which to market goods and services.

Calvert and his colleagues have undoubtedly done their homework, but danger remains for those less prepared. The challenges will be particularly serious for professional and financial services firms that must remain ever mindful of their regulatory and compliance obligations around client communication, record-keeping and data retention.

As part of its efforts to curtail market abuse, the Financial Services Authority recently introduced requirements around recording telephone conversations and electronic communications. In its Policy Statement 08/1, the regulator wisely leaves an open definition of what “electronic communications” might entail, rather than constantly playing catch-up with the frenetic pace of technological progress.

Depending on the type of business being conducted, there several standards of data retention that must be observed, which could present issues where regulated communications take place on a platform that is operated by a third party.

Then there are the deliberate limitations of the medium itself — depending upon the subject matter, it may be a stretch to fit all the required detail into a 140-character tweet. Organisations must therefore consider, and probably limit, the types of communication for which Twitter is used.

Even for businesses not actively embracing Twitter or other social networking services, it is still highly advisable to have a formal policy outlining acceptable use, at the office and beyond, as well as the penalties for misuse. This would normally cover topics including protecting confidential information, conflicts of interest, cyber-bullying, defamation and more generally respecting the privacy and dignity of others.

Fundamentally, businesses and individual employees keen to take commercial advantage of Twitter and other social media must remember they are entering an area with far less control over how information is interpreted, disseminated and retained. A tweet may not have the gravitas of a written letter, but it would be a mistake to treat it with any less respect.

The author is a senior solicitor in the employment, pensions and benefits team at Maclay Murray & Spens

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