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Should twitter be an FSA free zone?

The FSA seems to have taken an interest in Twitter recently and contacted a number of firms about their recent tweeting. Most of the comments on the Money Marketing website were asking why the FSA is not doing something more important rather than looking at social media.

Twitter allows you to write posts of up to 140 characters. Some people use Twitter for social reasons, some use it for work to promote their services and some use it for a bit of both. There has been a degree of debate from mortgage tweeters recently as to whether or not the FSA rules still apply to Twitter. To be fair to the FSA, I think Twitter usage is widespread enough that it is important for firms using it to stay the right side of the rules when mentioning products in their tweets.

The FSA produced a guide last year entitled, Financial Promotions Using New Media. The guide is rather short but it is explicit and confirms that if you are doing anything more than image advertisements on any media, new or old, then you need to use the usual rules on risk warnings and disclosures. It suggested that doing this within 140 characters may be difficult, so using it may not be possible.

An FSA spokesman recently said: “There are a handful of exceptions but, generally speaking, mortgage adverts need a prominent risk warning”. The resulting debate between mortgage tweeters was generally over what is an advert. One user suggested that as their tweets about products did not ask people to contact them about the products, they were not advertising. Another suggestion was that Twitter was simply banter between friends. I disagree with both of these. I did not think a promotion needed to invite a customer to contact the firm, with Twitter all you have to do is to click reply. If you wrote a newsletter which mentioned some new mortgage rates and you emailed it to several hundred people of whom some were clients and some were industry contacts, I am sure that your compliance department would be keen to see it first to make sure it had the necessary warning and disclosure. Some brokers clearly do not feel that this is necessary with Twitter.

With regard to whether or not Twitter simply facilitates banter, I think it depends on who is doing the tweeting. If you are a mortgage broker tweeting under your company name and the majority of your followers are clients, then I do not think this is simply banter. To me, tweeting product details is promotion and the normal rules apply. Some Twitter users have queried why newspapers can quote rates without APRs, etc. The difference is that newspapers do not earn their living by selling mortgages whereas brokers do. One comment on the Money Marketing website asked why a bank can advertise at a football ground, but the advert simply stated “Woolwich Offset Mortgages”.

I am sure this qualifies as image advertising. If you are a regulated mortgage broker earning a living by selling mortgages then you need to abide by the FSA’s rules. If you are in doubt, I am sure if you contact the FSA it will confirm what you are allowed to do and what you are not.

Jonathan Cornell is head of communications at First Action Finance

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Comments

There are 11 comments at the moment, we would love to hear your opinion too.

  1. The whole world should be an FSA free zone.

  2. Maybe if Tweets of this kind were only used to redirect people to a compliant page on a website then it would be ok. Just a thought.

    The world as an FSA free zone! What a novel idea!

  3. Rob Derry (Brunel Mortgages & Loans Ltd)) 7th October 2011 at 4:03 pm

    They should probably take an interest, but even if a potential customer responds to a tweet how much of the sales process has really been covered? Less than 1% probably. From there on, there are fact finds, IDDs, recommendations, KFIs, suitability letters etc, etc. The main focus should be on the advice after that point. The tweet is incidental really and even less useful than buying a lead.

  4. Anonymous,

    I don’t agree. As FSA correctly say, it’s what you say, not how you say it.

    I you are image advertising, for example promoting your company name, contact deails or web address for example, then fine.

    If however you say, New fixed rate deal from XXXXXX at X.X%, then I’m sorry the usual warning statements are required. Providing these on the firms website is not sufficient.

  5. @Rob – You are wrong in respect of twitter being useful, it is if it is used in the correct manner. Problem is not many people ‘get it’.

    As for the point about FSA’s interest, it’s probably justified. The majority of tweeters are using it to build awareness of their comapnies services. Done in the right way it shouldn’t be a problem, but I think in this industry it is very difficult, but still possible to be compliant.

  6. FSA have said (in the guide) that they are “media neutral” This is really quite simple. If you can say something to someone without giving them a risk/regulatory warning then you can certainly “tweet” it

  7. God, what a non story. Using any media like this constitutes a financial promotion……..I don’t understand why people would think an ad on twitter/facebook/google+ is anything other than an ad which comes under the rulebook….

  8. I agree with Rob. When will it ever end? Dont get me wrong I am an advocate of compliance & feel it is as much for my protection as the consumers, but really this has got ridiculous. The FSA should concentrate on the important things that really matter. How about ambulance chasers for a start?! As long as the tweet is fair & not mis-leading & doesn’t quote rates etc no harm done! Thats what KFi’s,IDD & fact finds are for to get to know the customer! Back off FSA.

  9. As is the case with any other type of media it will be a tiny minority that undo the well-meaning work of the vast majority! Twitter has been a useful tool for many IFAs to build profile (both B2B but increasingly with clients).

    It’s not about flogging products, but about building brand and reputation. You p*ss someone off on Twitter and by its very nature you’re history far quicker than the FSA could ever legislate.

    I did chuckle at Jonathan’s statement of the FSA’s Financial Promotions Using New Media being ‘rather short’ – says it all! By the time any meaningful legislation comes along Twitter will be superseded – or will have morphed into – The Next Thing.

    Keith @CodaConsulting

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