After a near 4-year wait, the Financial Conduct Authority (FCA) has published its consultation document setting out its intended approach for supervising the use of social media by firms.
In its consultation paper, it outlines examples of compliant and non-compliant social media posts, in the hope this will give the industry more clarity on how they should and shouldn’t be using social media platforms.
Publishing the consultation, the FCA said it recognises that social media offers a powerful communication tool to firms and is therefore of significant value to them when contacting their customers, and vice versa, both pre- and post-sale.
However, it added that firms needed to be mindful that any form of communication, including through social media, is capable of being a financial promotion and therefore bears a fundamental requirement to be compliant.
Commenting on the consultation, Clive Adamson, director of supervision at the FCA said: “The FCA sees positive benefits from using social media but there has to be an element of compliance. Primarily, what firms do on social media must ensure customers are at the heart of their business.
“We believe our guidance is a sensible approach that doesn’t affect industry’s ability to innovate using new forms of media.”
So what is in the detail of what the FCA has proposed?
1: As with all financial promotions, the FCA said all social posts should be compliant, fair, clear & not misleading.
2: Promotions on social platforms for investment products must be identifiable as just that. It suggests using #ad as a way of letting followers know it is a promotion of their product or service.
3:Each communication whether it be a single tweet, Facebook post or webpage needs to be stand-alone compliant so the audience is aware of the potential risks at the touch-point they see the communications.
4: The FCA says images can be used where character limits are an issue but risk warnings & other information required by its rules can’t appear solely in the image. Both copy and the image need to be individually compliant.
5: Firms need to keep their own records of any significant social media posts & not rely on digital media channels to maintain records for them.
6:Where a user shares/retweets a firm’s post, the responsibility lies with the user, not the firm; however the caveat is the original post by the firm must be compliant however….
7: …If a firm retweets a customer’s tweet it assumes responsibility as the communicator, even though the firm didn’t generate the original post.
Commenting on the FCA social media guidelines, Sharon Flaherty, Founder of BrandContent said the regulator had not lived up to its promise of enabling the industry to innovate with social media, and in fact had got the balance of regulation and social media best practice wrong.
“It’s great that the regulator clarified good and bad practice in its consultation document, which will go some lengths to guiding firms to staying compliant on social media. However, it appears the regulator has neglected social media best practice.
“If we look at its example in fig 6 & 7, this may be compliant but it is certainly not engaging, and I’d question what benefit posting this on social media would do for any firm. Social media is about conversation, it is not a 1-way, broadcast channel and I’d urge firms and the FCA to take social media best practice into consideration when it publishes its final guidelines,” she said.
The FCA is now calling for all views on its consultation by 6 November 2014.
Read the official FCA consultation document here: http://www.fca.org.uk/news/guidance-consultations/gc14-06-social-media-and-customer-communications