The FCA has launched a guidance consultation CG14/6 which is intended to clarify its approach to the supervision of financial promotions in social media. Full details can be found here.
We have highlighted some of the main points from the paper and the impact this might have when using social media.
What is Social Media?
- Social networks (Facebook, LinkedIn, Google+);
- Image and video-sharing (You Tube, Instagram, Vine, Pinterest).
- Digital media is becoming the media of choice for customer communications and specifically for financial promotions;
- A number of these media have character limitations which can constrain their use;
- The FCA is aware that firms may want to use certain media but they perceive difficulties in complying with some of their rules particularly financial promotions.
Reminder – what is a financial promotion?
- Any communication if it includes an invitation or inducement to engage in financial activity.
Impact: take care when tweeting or posting on social media sites especially if trying to promote services.
- It must be made ‘in the course of business’ which requires a commercial interest on the part of the communicator. Intended to exclude genuine non-business communications.
Impact: general social media conversations when not acting in the course of business should be ok but be careful not to cross boundaries.
Fair, clear and not misleading
- Customers must be at the heart of the business and financial promotions should be fair, clear and not misleading.
Impact: no change here.
- Financial promotions for investment products have to be identifiable as such. For character-limited media, consider #ad in online posts.
Impact: use the #ad in online posts. Consider if character limited media is the most appropriate method to promote complex products or services.
- Responsibility for re-tweets and forwarding lies with the communicator. However, breaches of FCA rules in the original communication would be the originating firm’s responsibility.
Impact: ensure communications are compliant even if forwarding or re-tweeting information you receive.
- Each communication should be considered individually and must comply with relevant rules even if it ends up in front of a non-intended recipient i.e. it is forwarded or re-tweeted.
Impact: ensure communications are always fair, clear and not misleading and comply with the rules.
Risk warnings and other required statements
- Risk warnings or other statements must be included in promotions for certain products/services.
Impact: for character limited communications insert images such as infographics into tweets. Risk warnings or other information required by the FCA rules cannot appear solely in the image.
- Good for character limited communication. Typically consists of: name of firm, a logo or image, a contact point, types of regulated activities provided by the firm or its fee or commission.
Impact: consider image advertising for character limited communication.