UK’s Financial Conduct Authority (FCA) has come up with new guidelines for financial services firms on how they should use social media for promotions in compliance with regulations.
The guidelines, which were issued following extensive consultation with the industry, offers more clarity as to how FCA regulated firms can interpret current regulations in this space.
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"Social media is already an important tool for industry to engage with customers and its use is only likely to grow. Financial promotions, whether on social media or traditional media, must give customers the right information and meet our requirements to be fair, clear and not misleading," commented FCA director of supervision and authorisations Tracey McDermott.
The guidelines say that considering the wide reach of social media, the original communication promoted by firms should remain fair, clear and not misleading, even if it ends up in front of a non-intended recipient such as through others retweeting or sharing.
FCA said that rule breaches in the original communication are the responsibility of the originating firm, and not the retweeter.
The watchdog further stressed on the need for firms to consider whether it is good to use character-limited social media as a means of promoting complex features of financial products or services.
Firms can signpost a product or service with a link to more comprehensive information, given that the promotion remains compliant in itself.
The regulator also highlighted that firms should include risk warnings or other statements in promotions for certain products/services, though this poses a challenge for social media use.
In this case, the solution could be to insert images into communications such as tweets, which enables relatively unrestricted information to be conveyed. However, the image must be compliant.
FCA also said that firms need to have an adequate system in place to sign off digital media communications, and the sign-off should be conducted by a person of appropriate competence and seniority within the organization.
