The FCA recognise that social media marketing is an area of your business that will only continue to grow in the coming years. Their newest guidelines on how to use social media for financial promotions reflects their supervisory approach, which allows advisers to stay compliant whilst enjoying the benefits.
Head of Compliance Stephen Adams has a quick guide to the new document, to help you get a better understanding of how to use social media safely:
The FCA have stated that the definition of a financial promotion within social media is: “An invitation or inducement to engage in financial activity.” This is a key definition and one that applies across all communications. The FCA states that “there are requirements to include risk warnings or other statements in promotions for certain products/services. These rules are media-neutral and therefore apply to social media as they would to any other medium.”
The FCA are also keen to highlight that: “The requirements to be fair and not misleading imply balance in how financial products and services are promoted, so that consumers have an appreciation not only of the potential benefits but also of any relevant risks.” This is an important clarification which ensures that the restrictive nature of social media does not excuse firms from displaying the associated financial risks.
The two most important questions to ask before posting are: Is this a financial promotion according to the FCA guidelines? Am I able to display and balance the potential risks within the communication?
The guidelines have been the subject of some debate between the industry and the FCA, with much of the discussion surrounding the limits and brevity of social media posting, potentially making it difficult to fully comply with regulations in just a small piece of content. The FCA has therefore suggested that firms’ use of word-restricted channels should be limited and not used if promoting a complex feature or service. If you do decide to use it, then you still have the responsibility to ensure it contains the minimum amount of information required.
To help with character limits, the FCA have suggested: “It may be possible to signpost a product or service with a link to more comprehensive information, provided that the promotion remains compliant in itself.” In other words, make sure that you are only promoting financially when all the associated risks are displayed on the communication, otherwise it must remain neutral as an advertisement.
To know when sharing, liking or forwarding a communication is compliant, check whether it originated from a customer or another FCA regulated firm. Although it is always the responsibility of the original communicator to ensure the post is compliant, the FCA does insist that when “a firm re-tweets a customer’s tweet, the firm is responsible as the communicator, even though the firm did not generate the content of the communication”. The FCA also maintains that: “Firms should ensure that their original communication would remain fair, clear and not misleading, even if it ends up in front of a non-intended recipient”.
Using images to promote is very popular on social media, but you still have a responsibility to ensure that your visual communication is not just compliant, but fully responsive on all devices such as phones and tablets.
If images contain a tagline that directly calls the consumer to action, such as “come and see us” or “save money here”, then they must also display the associated risks. If not, then it must remain solely as a visual advertisement.
Firms regulated by the FCA must be careful at all times when using Social media. The FCA also reminds firms “of their obligation to have an adequate system in place to sign off digital media communications.” Sign-off of social media communications should always be a person of appropriate competence and seniority.
Please remember, this is only a guide! So be sure to read the full FCA Guidelines to ensure you are up to speed on the latest on how to safely use social media. We also recommend contacting social media specialists Social Advisers through the Broker Zone website.