Out-Law News | 06 Aug 2014 | 3:57 pm | 3 min. read
The regulator said that rules on financial promotions must be adhered to on social media and that an overarching requirement that the promotions are "fair, clear and not misleading" applies equally to promotions posted on Facebook and Twitter as those advertised on more traditional media channels.
When promoting financial products and services, financial services companies are required to include certain information alongside their promotions, such as disclosures of the relevant risks customers face in taking up a promotion offer. However, the FCA said that limitations on the number of characters that can be used when posting on some social media platforms, in particular on Twitter, presents a challenge to businesses to ensure they meet all their disclosure requirements when promoting via those channels.
The FCA said that financial services companies can display "risk warnings" and other information they are required to include alongside financial promotions in the form of images inserted alongside social media postings to ensure they remain compliant with their regulatory obligations.
"One possible solution to the problem of character limitation is to insert images, including the use of infographics8, into communications such as tweets, which allows relatively unrestricted information to be conveyed," the FCA said in new social media guidance (15-page / 1.73MB PDF) it has issued, which updates guidance previously issued in 2010. "Clearly, the image must in itself be compliant."
"However, we are aware that the functionality that allows a Twitter image to be permanently visible, may be switched off so that the image appears simply as a link. Therefore, where the financial promotion triggers a risk warning or other information required by our rules, this cannot appear solely in the image," it said.
The regulator also said that financial services companies must ensure that their promotions are sufficiently targeted so as not to "lead consumers to buy the wrong product". It said there is a risk that the sharing of their promotions on Facebook or 're-tweeting' of them on Twitter could lead to the promotions reaching the wrong target audience. Financial services companies can use "software that enables advertisers to target particular groups very precisely" to manage this risk, it said.
The FCA said that promoting complex features of financial products on Twitter or via other social media channels where character limitations apply may not be appropriate. It said that companies may be able to promote those products on social media by posting a link to "more comprehensive information" about complex products or alternatively use 'image advertising' to promote their company more generally.
"‘Image advertising’ … is defined in the FCA Handbook as advertising that only consists of the name of the firm, a logo or other image associated with the firm, a contact point and a reference to the types of regulated activities provided by the firm or to its fees or commissions," the FCA said.
The FCA also reminded companies promoting investment products that those promotions must be "identifiable as such". If the promotions are made via social media, the companies can insert '#ad' alongside their promotions to stay compliant, it said.
In addition, the FCA said that financial services companies that share content produced by others on social media, such as by re-tweeting customers' 'tweets' on Twitter, will be held "responsible as the communicator" of that message "even though the firm did not generate the content of the communication".
Financial services companies were also warned that social media postings made from employees' personal accounts could, in some cases, be construed as coming from the company themselves. It said the companies should have a system in place for approving all digital communications and for keeping a record of "any significant communications" and not rely on social media platforms' storage of the records of communications since content may be deleted by those providers.
Clive Adamson, director of supervision at the FCA said: "The FCA sees positive benefits from using social media but there has to be an element of compliance. Primarily, what firms do on social media must ensure customers are at the heart of their business."
“Our overall approach is that financial promotions, whether on social media or traditional media, should be fair, clear and not misleading. We have had extensive industry engagement on this issue and we believe our guidance is a sensible approach that doesn’t affect industry’s ability to innovate using new forms of media. We recognise social media are constantly evolving. We, therefore, welcome feedback to today’s consultation and look forward to continuing the discussion with industry," he said.