FCA Guidance – key pointers for social media & customer communications

UK companies in the financial services sector may have to take a step back and review their social media activity following the announcement of the Financial Conduct Authority (FCA) rules that regulate financial promotions on social media.

Wordle - FCA Guidance

The focus of the FCA is primarily to regulate the conduct of both retail and wholesale financial services firms. It can investigate and ban products and can instruct firms to immediately retract or modify promotions which it finds to be misleading.

The latest FCA update published at the end of March 2015 is intended to protect the consumer against being misled or making ill-informed decisions, whilst at the same time protecting the businesses against loss or closure.

Included below are some of the more important points from the guidelines. To ensure businesses remain compliant it might be a good idea to commit them to memory:

  • [1.4] A financial promotion is any communication, which “includes an invitation or inducement to engage in financial activity”.
  • [1.7] All communications (including financial promotions) must be clear, fair and not misleading, as content that is unclear, unfair or misleading poses a risk to consumers and firms alike.
  • [1.9] Signposting to financial promotions is acceptable, as long as the destination of a ‘click-through approach’ contains all relevant risk warnings, and the social media post itself is ‘standalone’ compliant. The FCA has provided clarity around it not being compliant to have a financial promotion within the social media content, and signpost to the risk warning.
  • [1.13] Imagery can be used to ensure all relevant risk warnings are visible, however, firms must understand the nuances of specific social media platforms (i.e. Twitter), where images being visible at all times can be switched off.
  • [1.21] Social media interactions are not ‘real-time’, as they are directed at multiple recipients and do not require an immediacy; thus firms are required to follow conduct of business rules and create a record of the interaction.

 

The main issue with the latest update centres around the now prevalent issue with retweets. This is a potential minefield. If a firm retweets a customer’s tweet expressing gratification with good customer service, then that is compliant, as it is not a financial promotion. However, if the customer’s tweet comments on a regulated product or service, then sharing or forwarding by the firm (i.e. liking or retweeting) will constitute a promotion by the firm.

It is therefore best to be cautious when sharing content online, especially through social media channels which have the power to disseminate potential mistakes in the blink of an eye. If the content you are thinking about sharing has a financial bearing then make sure you consult the FCA guidelines. Chances are however, if you have to check the rules, you’re probably breaking them.

Click here to download a copy of the guidelines.

Feel free to contact our digital team on digitalteam@citigatedr.co.uk if you’d like to know more about the FCA guidance.

 

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