The new approach forms part of the FCA’s finalised guidance on the use of social media in financial promotions published on Friday.
In its final report, which follows a consultation paper published in August last year, the FCA has extended much of its existing requirements on financial communications to the world of social networks, video sharing platforms, microblogs and other communication applications.
“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,” said Tracey McDermott, director of supervision and authorisations at the FCA.
In making clear where these rules will apply, the FCA said that for firms retweeting, sharing or liking a consumer’s original communication, and whether this action can be considered an inducement or an invitation and thus fall under its financial promotions rules: “they can all be considered inducements or invitations depending on what the original consumer communication stated.”
“For example if the consumer communication stated ‘just got a brilliant two-year fixed rate mortgage from Firm X’ and then Firm X subsequently retweeted/shared/liked this communication – there is clearly an action made by the firm, which is in their commercial interests.” it said.
“Therefore, the firm’s subsequent communication would then be subject to the financial promotion rules.”
When it came consumers sharing or retweeting a social media post, the FCA made clear the responsibility lies with the communicator (i.e. the person sending the retweet or sharing the communication).
However, it said if a consumer retweets or shares a promotional communication from a firm and they are not acting in the course of business, then only the original communication from the firm would fall within its remit.
“The consumer’s subsequent communication would fall outside of regulation,” it said.
When an employee of a firm uses their personal social media account to send communications that could be considered an inducement or invitation, then this may constitute a financial promotion and may could be subject to the same rules that apply to the firm, the FCA said.
However, if the employee is sending out a genuine non-business communication, or if the conversation involves groups and individuals not acting in the course of business, then this would fall outside of FCA regulations.
Clarity welcomed
Colin McLean, managing director of SVM Asset Management welcomed the clarity from the FCA on the retweeting of endorsements and the use of social media by people who work in the financial services area.
“It’s really helpful and reminds people that if they are not using social media in a commercial sense then they can post stuff,” he said.
However, the FCA‘s new guidance does also make clear that companies must log all social media posts, and McLean suggested this may mean it could still have to log posts by staff to be able to show these didn’t’t contravene FCA rules.
“I would say everyone using social media may have to still have to run it buy compliance,” he said.
Another change the FCA did make was in reversing its initial suggestion that companies use hashtags to clearly delineate what constitutes a financial promotion.
“We have revised our stance on this issue. We believe that hashtags are not an appropriate way to identify promotional content,” it said.
