March 17, 2015 - Comments Off on The social media guidance that all financial firms need to know
The social media guidance that all financial firms need to know
It’s been a hotly discussed topic – how can financial firms promote their services on social media in a way that’s compliant? Following a consultation last autumn the Financial Conduct Authority (FCA) has released a set of guidelines to help companies embrace the evolving world of social media without the fear of being fined.
The FCA recognises the changing methods of promotion and communication, but it insists that social media is treated like any other type of media. So, all communication must be fair, clear and not misleading.
You may have seen this reported recently – what the FCA deems right and wrong; the dos and don’ts. So, if you’re a financial services firm, what are the key points? Here’s what we’ve highlighted:
Each communication (so each tweet or post on Facebook, LinkedIn etc) needs to be considered individually – and each should comply with the relevant rules.
No need for #ad
Once upon a time you had to use the hashtag #ad to show that your message was an ad. The FCA has now revised its stance on this, accepting that most promotions on social media will be self-evidently promotions.
Paid-for advertising already shows that the content is promotional through statements such as ‘promoted by’, so the addition of #ad is unnecessary.
Risk warnings and other required statements
Risk warnings must be included in promotions, regardless of the text restrictions. A low character limit is not an excuse, or a defence. The FCA suggests including a (compliant) image into your communications.
A word of warning here – the image may appear as a URL link, so the signposting text needs to be compliant too. It’s not acceptable to tweet: “To see our top-performing UK equity fund, go to <link>.” Instead it should be: “To see our current UK equity fund range, go to <link>.”
The FCA considers that unsolicited promotions through social media must comply with current unsolicited real-time promotions (cold calling) rules.
Approval and record-keeping
Firms need an adequate system in place to sign off media communications – and social media promotions are no different. Sign-off should be done by a person of sufficient competence and seniority.
Tracey McDermott, Director of Supervision and Authorisations at the FCA, said: “Social media is already an important tool for industry to engage with customers, and its use is only likely to grow. Financial promotions, whether on social media or traditional media, must give customers the right information and meet our requirements to be fair, clear and not misleading.”
The FCA says that firms must give an appropriate level of oversight and sign-off, as they would for any other forms of promotion. No longer can a firm’s tweets be left out of the compliance loop.
This will be the key challenge for financial services firms – using an often faster method of communicating and promoting while remaining compliant.
Read the FCA Finalised Guidance for all the details.