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FCA social media rules create retweets ‘minefield’

The FCA’s final guidance on financial promotions in social media creates a “minefield” for firms wanting to share customer feedback, say advisers.

Following a guidance consultation issued in August, the regulator confirmed last week that each communication needs to comply with the relevant rules on a standalone basis, and that risk warnings apply to social media in the same way as for any other medium.

The regulator says it was asked for further clarification on where the responsibility lies when a communication is retweeted and when this can be considered a financial promotion.

It says that a firm retweeting, sharing or liking a consumer’s post could be straying into the financial promotions rules.

The FCA cites a firm retweeting or liking a post from a customer stating “just got a brilliant two-year fixed rate mortgage from firm X” as an example of where the financial promotions rules would apply.

But it says if the customer’s post only refers to customer service, this is not a financial promotion as it does not reference a regulated product or service.

Investment Quorum chief executive Lee Robertson says: “The regulator has not done a bad job given this is a very fast moving area.

“However, advisers have to be very careful about retweets – that is a potential minefield.

“Social media is all about interaction and if a customer has been complementary you want to show them the courtesy of liking or retweeting it. The FCA could be more pragmatic on that issue.”

The regulator has changed its stance on using hashtags to identify financial promotions.

In the consultation paper, the FCA said one way of identifying financial promotions on character limited-media such as Twitter is to use the hashtag #ad, but it now says this is not appropriate.

It says when consumers click on a hashtag, they will be led to a separate page where all the communications that have used the hashtag will be displayed.

The FCA says: “These communications and their content will be outside the control of the firm.

“There is potential for consumer confusion as the majority of the information will be irrelevant to the initial communication, although this may not be immediately obvious to the user.”

Cervello director Chris Daems says: “The final guidance provides clear examples of what the FCA feels does and doesn’t constitute fair and compliant promotions.

“However, social media isn’t usually used for such blatant adverts as the paper focuses on. It is used more for engagement and debate and it would be useful to have more clarity on whether this type of activity could be considered a financial promotion.”

Social media rules at a glance

  • All communications must be clear, fair and not misleading – even if they end up in front of a non-intended recipient.
  • Inserting images is one possible solution to displaying risk warnings through character-limited social media. However, Twitter users can switch off image functionality so that images appear as a link. Therefore where a promotion triggers a risk warning this cannot appear solely in the image.
  • Firms can tweet a link to a website with a financial promotion, but the tweet itself must be standalone compliant. For instance, “to see our current UK equity fund range, go to www.FirmXYZ.co.uk” is compliant, but “to see our top-performing UK equity fund, go to www.FirmXTZ.co.uk” is not.
  • If a firm retweets a customer’s tweet expressing satisfaction with good customer service, that is not a financial promotion. But if the customer’s tweet comments on a regulated product or service, then sharing or forwarding by the firm (through liking or retweeting) will constitute a promotion by the firm.
  • Firms must have an adequate system in place to sign off digital media communications and keep adequate records of any significant communications.

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Comments

There are 3 comments at the moment, we would love to hear your opinion too.

  1. Derek Bradley ceo Panacea Adviser 19th March 2015 at 2:24 pm

    We have made comments to the FCA on the subject when requested and sent them a copy of our free to download social media guide to assist in giving them a better understanding when preparing their guidance.

    http://www.panaceaadviser.com/main/st9622/Using+Social+Media+Successfully.htm

  2. If we say ‘The FCA rules on social media are disjointed and we need more joined up thinking when it comes to financial promotions #nothelping please RT’ – is that OK?

  3. Kenneth Hanning 19th March 2015 at 4:01 pm

    It will have been said before – but social media is essentially about being “social”. It’s a great place to let your customers – that you may only see annually for a review – feel closer to your business and a “part’ of your culture. Updates that cover “meet the team”, social events, community involvement, witty stories from your day – are far more likely to drive this engagement than posts requiring risk warnings. Getting closer to existing customers, engaging new customers and listening to customer feedback are three key benefits of a great social media marketing plan for IFAs. Given the confusion and changing messages around pensions “freedoms” and annuity changes – this would be a great time to engage with social media to stand out as people that potential customers would like to meet and talk with. Balance your engagement a bit like attending a dinner party: don’t be the overbearing dominant guest ( Jeremy Clarkson- esque ?), and don’t be the shrinking, non-chatting wallflower (can’t think of any media types that fit that bill ! ); strike a balance of posting regularly in a witty and engaging manner, and respond to comments, retweets, likes and shares – your potential customers don’t like to be ignored! Social media is for the long term, and can ensure that your customers and potential customers develop a much closer relationship with you; you can listen to them and understand their needs and what they like to see better – and they are more likely to direct friends and contacts to you when those friends say ” do you know a good pensions person?” etc. Think of it as a cross between building relationships, making friends, gaining “digital” referrals and think of your posts as being like the “James Herriott” of your profession. He never really discussed the technical aspects of being a vet – but you’d have wanted him to be yours just by reading his books! Ken Hanning, The Wee Social Media Marketing Company ( naturally!)

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