The FCA says firms can use hashtags and images to comply with its financial promotions rules, in social media guidance published today.
In a guidance consultation the regulator says financial promotions for investment products must be identifiable as such. It says one way to do this on character-limited media, such as Twitter, is to use the hashtag #ad.
It says one possible solution to the problem of character limitation and the need to display adequate risk warnings is to insert images into communications such as tweets. The FCA says this “allows relatively unrestricted information to be conveyed”.
However, the regulator says that where the financial promotion triggers a risk warning or other information required by its rules, this cannot appear solely in the image.
The FCA also says firms must keep “adequate records” of any “significant” social media communications.
It says: “As well as helping to protect consumers, these records enable the firm to deal effectively with any subsequent claims or complaints.
“Firms should not rely on digital media channels to maintain records, as they will not have control over this: social media in particular may refresh content from time to time, with the consequent deletion of older material.”
The regulator adds that firms should have an adequate system in place to sign off social media communications, which must be done by a person of “appropriate competence and seniority”.
The FCA says the guidance aims to clarify its approach to social media, as it is aware many firms perceive difficulties in complying with its rules, particularly with the financial promotion rule for character-limited media such as Twitter.
FCA director of supervision Clive Adamson says: “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.
“Our overall approach is that financial promotions, whether on social media or traditional media, should be fair, clear and not misleading.
“We have had extensive industry engagement on this issue and we believe our guidance is a sensible approach that doesn’t affect the industry’s ability to innovate using new forms of media.”
The FCA also says firms must take into account in the nature of their promotions the fact that social media can reach a wide audience very rapidly. It says this means the communication must remain clear, fair and not misleading even if it ends up in front of a non-intended recipient, for instance through retweeting on Twitter.
It says a way of managing this risk is the use of software that enables advertisers to target particular groups very precisely.