RegulationAug 6 2014

FCA tells firms to track their Tweet viewers

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Firms who use social media must ensure communcations are fair, clear and not misleading and are non-promotional, and the FCA states one way of managing this is by using software that enables firms to target particular groups.

The regulator’s guidance consultation, published today (6 August), revealed its overall approach is that the financial promotion rules must be “media-neutral to ensure that consumers are presented with certain minimum information, in a fair and balanced way, at the outset of firms’ interaction with them”.

The regulator said it does not want to prevent firms from using social media, as it understands this can be a powerful communication channel and therefore of “significant value to firms”.

However, it warned that any forms of communication, including social media, can be viewed as a “financial promotion” and therefore communications must be compliant.

The regulator said “firms should therefore ensure that their original communication would remain fair, clear and not misleading, even if it ends up in front of a non-intended recipient, through others re-tweeting on Twitter or sharing on Facebook”.

It said that one way of managing this risk “is the use of software that enables advertisers to target particular groups very precisely”.

The regulator said that firms must ensure that it is clear that a promotion is a promotion and one way of doing this is by using #ad.

The regulator listed examples of good and bad Twitter practice.

The regulator said the following Tweet is ‘non-compliant’: 500 people copy Joe’s trades. He made 754 per cent in one year. Think he’ll continue to gain? Start following him now.

According to the FCA an example of a fair, clear Tweet, which conveys a prominent warning within the character limitation is: #ad Spread betting + CFDs: Trade GBP/US with us. Your capital is @ risk and losses can exceed your deposits.

Firms should consider the appropriateness of character-limited media, such as Twitter whereby posts are limited to 140 characters, as a way of promoting “complex features of financial products or services”.

The regulator said a solution to character limitation is to insert images, such as infographics into tweets, “which allows relatively unrestricted information to be conveyed”.

However, where the financial promotion triggers a risk warning or other information required by the FCA’s rules “this cannot appear solely in the image”.

The FCA added that it remains possible for firms to advertise their presence through ‘image advertising’ in a way which is unlikely to present difficulties with character limits.The regulator added that firms can tweet a link to a website with a financial promotion, however the signpost must be standalone compliant.

The FCA said: “For example, with mortgages, character-limitation imposes constraints if the content would otherwise trigger the risk warning.”

The FCA said the following tweet is complaint as the signposting wording does not create a financial promotion, it simply urges the recipient to find out more: “To see our current mortgage offers, go to www.wharfmortgages.co.uk”

However, this is not compliant as the word ‘great’ creates a promotion that requires a risk warning: “To see our great mortgage offers, go to www.wharfmortgages.co.uk”.

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.”

The consultation closes on 6 November 2014.