Social media has become widely accepted as a marketing channel – to the extent that financial firms are now expected to have a presence on Twitter, LinkedIn or Facebook.
Its immediacy and ability to deliver real-time client interaction have helped to cement the popularity of social media for marketing. But it’s not without its potential pitfalls.
Newspapers love to regale corporate social media gaffes, and while it is easy to delete a post or a tweet, nothing in cyberspace can ever be totally erased. Social media may be immediate, but it’s definitely not impermanent.
You need to take the same level of care when posting online as you do when publishing in print – although not all firms appreciate this.
For regulated financial services firms, the involvement of the Financial Conduct Authority (FCA) adds another layer of supervision and potential complexity to social media activity.
FCA policy on social media
In March 2015, the FCA released updated guidance on social media. Before this, the regulator had last issued social media guidelines in 2008, since when a lot has changed in terms of the platforms available, the take-up of social media by financial services firms and the expectations a social media presence creates.
The guidance clarifies the regulator’s approach on a number of social media issues. It also sets out new expectations in specific areas, such as the use of hashtags.
Social media is not a real-time promotion
One of the key issues covered in the updated guidance is clarification of the way the FCA views social media. Previously there was some debate about whether social media should be classed as a ‘real time’ financial promotion, like phone calls or emails, and therefore not fall under the FCA’s stringent rules for compliance approval.
The guidance confirms that social media is a ‘non-real time’ promotion and therefore subject to the same compliance requirements as published marketing collateral and webpages. Its instant nature doesn’t preclude it – although it does make it more of a challenge to achieve timely sign-off and to archive approvals and posts.
Sharing and retweeting needs to be carefully managed
The guidance makes it clear that the regulator considers retweeting and sharing of positive comments from customers or others to be classed as financial promotions. This is an area where the FCA rules had not previously been explicit, and means that firms need to be careful when sharing content posted by others.
A clear stance on risk warnings
In the 2008 guidance, the FCA had not been specific about risk warnings, and the general understanding was that social media posts were compliant if they linked to a risk warning elsewhere –for example, on a webpage.
The new guidance makes it clear that every communication via social media needs to carry a risk warning. This has huge implications for the type of content firms can post compliantly, particularly on platforms such as Twitter, where posts are limited to 140 characters, making it very difficult to include a risk warning.
As a result, you may need to think carefully about whether social media is the best channel for the message you want to convey.
Use hashtags with caution
The FCA stance on Twitter hashtags has also been firmed up in their new policy. Previously, the regulator had suggested using the hashtag ‘#ad’ to signify a financial promotion. In their updated guidelines, they move away from this, stating that it is not enough to use ‘#ad’ to signpost a promotion; instead – as above – each post needs to have its own risk warning.
Hashtags more generally also come under the regulator’s scrutiny; their concern here is that if you include a hashtag in your tweet – for example, ‘#finance’ – users can click on it and be taken to a curated page of other tweets using the same hashtag. These won’t be produced by your firm, and you have no control over them, but users might not appreciate this and as a result, the FCA believes, may be confused.
Firms need a clear social media policy
Because the FCA takes the same approach to social media as it does to other marketing activity, firms need to be in control of who posts and what content is allowed. Your social media policy should include guidelines on ‘house views’ on key issues and policies around the topics covered.
The FCA guidelines go into much more detail on all of these areas and more, and are a must-read for anyone responsible for social media in a regulated business.
How can we help you?
LS Consultancy has wealth of experience in reviewing financial promotions and can do so on a one-off or on an on-going basis.
We are also skilled in reviewing and assessing your financial promotion procedures and can assist you to establish the necessary framework to help future compliance with regulatory requirements.
Remember: Not everything is black and white when it comes to Financial Promotions, and many of the rules are open to interpretation. If you are unsure how your activities fit within the rules, please contact us.