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FSA warns firms ‘often fall foul’ of promotions rules on social media

FSA Letters 480

The FSA has issued a warning to companies using social media, saying they “often fall foul” of the financial promotions rules and will face regulatory action.

Speaking at the Tax Incentivised Savings Association annual conference in London this week, FSA head of asset management Ed Harley said its rules apply to all media.

He said: “Our rules on financial promotions are neutral as to the type of media used. Firms who use social media often fall foul of the rules and it is because they do not realise what they are tweeting, for example, is an inducement or can be an inducement to invest or engage in financial services.

“For instance, we recently had a mortgage broker who was tweeting about a particular mortgage product without including the appropriate risk warnings to be compliant. We spoke to the broker and it was withdrawn. Just think about that when using social media.”

The Financial Conduct Authority will have stronger powers to ban adverts and financial promotions and publicise wrongdoers. Harley said it will bring “greater clarity” to its expectations.

In a TISA debate on the use of social media, Old Mutual strategic marketing director Carlton Hood said it is “imperative” firms engage with social media despite the risks.

He said: “There are reasons that firms find it difficult to engage with social media but it is absolutely imperative that we do.

“Social media exposes us to a world with greater risk than we are comfortable with so we fight shy. But nobody watches television adverts anymore and the future of communicating is through social media. If you don’t find a way to master it then you are not going to be talking to consumers anymore.”


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There are 9 comments at the moment, we would love to hear your opinion too.

  1. The reason we are afraid of stepping into something new is the fear of being fined, banned or hung drawn and quartered by a regulator who hasn’t a clue of what is required to generate consumer interest in an industry that is being strangled to death by its actions.

    No one reads an advert laden with regulatory gobbledegook.

    As long as Clients are made aware of the risks when the full advice is provided what is the problem.

  2. And yet I have seen some ‘loan’ adverts on TV where the, no doubt astronomical interest rate, has not been disclosed.

    If the FSA focused on the real issues I am sure we would think a lot more of it.

  3. I have an advert that features all the warning notices and then ask “Are you sure you want to do this on your own?” or words to that effect…

  4. Totally agree with Richie – the issue is to make sure consumers receive the risk warnings pre-sale.

    From the FSA position though, sadly, they are aware that (still) too many distributors fail to meet this simple objective. Hence regulator’s sledgehammer approach. Pains me to say it but, once again, we are all suffering for the actions of the irresponsible

  5. So financial adviser that holds FSA registration has to watch what they put in social media or in adverts. A claims management firm as I found out fairly recently when putting a complaint into the FSA, ASA and MOJ can pretty much put what they want even though in my opinion they are talking about financial service products that are covered by the financial services marketing act 2000.

    One of these days the FSA may stop their double standards and regulate all parts of the financial services world to the same standards. It may be a good idea if the FSA moved into the 21st century and recognised that it’s almost impossible to put the amount of risk warnings into a tweet for example. This is the hook not the full advice process that all clients go through before product is sold. Why is it that financial services firms are been singled out here after all solicitor practices use social media and their regulator doesn’t force them to put every single risk warning you can possibly think of into tweets.

  6. John joe mcginley 15th November 2012 at 3:23 pm

    Social media is not a fad it’s here to stay and can greatly enhance our profession. I would hope the FSA don’t strangle the life out of a medium that can bring great benefits to advisers and clients. I hope common sense and a commercial awareness will prevail.

  7. They know there’s only 140 characters right? Out of touch morons.

  8. Perhaps the regulator needs to update its rules on advertising to reflect the growing changes towards technology and social media.

    Anyone in their right mind can see that as long the advertising is not claiming ludicrous things then surely there should be nothing wrong with advertising to generate interest as long as the appropriate risks/warnings are communicated to the potential clients during the initial advice process.

    Unless anyone can come up with a single line risk warning that would suffice. or perhaps a risk warning on the user’s page somewhere to cover this off.

    Putting ridiculously long risk warnings on every single tweet or online post is just plain silly – not least takes up a vast amount of resource and funds to police from the regulators point of view.

    Does anyone know what defines what they constitute to be an inducement when “advertising”?

  9. The regulators are closing the stable doors way to long after the horses have bolted, there are so many regulatory requirements on lenders now that no wonder no one wants to lend, proportionality and common sense in relation to the amount of the loan required has gone out of the window, the way its going no bank or finance company will want to lend ever… from dealing with FEE charging debt management companies that offer the £1 token payment (Very Reasonable) Lenders having to become Psychotherapists to show they understand mental health capacity issues, pages and pages of irresponsible lending guidance, PPI claims and claims management companies constantly looking for a tiny clause to get another round of claims going, WHO seriously would want to be a lender in today’s world, Let’s hope the new regulator the Financial Conduct Authority brings some good old fashioned common sense back to the lending world…Here’s Hoping!!!

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