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.