OpinionAug 21 2014

‘Caveat emptor’ should surely apply to Twitter

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The internet is a great source of neologisms. During its short life, it has helped words and phrases such as “unfriend”, “native content”, and “e-business” into our shared vocabulary.

While these words and phrases are new, the actions or concepts they describe are usually anything but (in the instances listed above, “fall out with”,“advertorial” and, er, “business”).

But we treat these things as new and fresh and exciting purely because they are happening on a different platform to before. The instinct is to imbue them with some special significance even though the fundamental activity involved is already familiar and, probably, covered by existing law.

And so it is with social media. The same rules that have always applied to marketing – in terms of best practice as much as keeping it legal – should still apply to professional use of social media. The two are the same thing, just as illegal downloading is only really the same thing as taping songs off the radio in the 1980s (which the music industry largely survived, incidentally).

As such, the FCA’s recent guidance consultation on use of social media seems a colossal waste of time and energy. In case you missed it, the guidance proposes a framework within which retail financial services can use social media, and exploit the most current platforms available to them without raising the ire of the watchdog.

It is the time involved that is the biggest issue. In attempting to legislate for the plethora of new platforms now available to the industry, the FCA has taken four years to issue this first draft.

I understand that a regulator needs some process to underpin its regulatory initiatives. It can not be seen to be kneejerk in its actions and responses. It is important it takes the necessary time to consult and consider before imposing rules. But if that process means any proposal will be out of date due to the fast-paced change that typifies the area it is trying to regulate, what value will it possibly bring?

Once the FCA’s required caveats are in place, a tweeter will only have 40 of the original 140 characters left with which to convey their message

“But surely it must be regulated,” I hear you cry, “We can’t have anarchy online with people behaving however they want.” Well, no, but why create special rules for it? Why not just expect the same standards as we already do for all activity outside of ‘social media’ without attempting to create rules specific to a medium which will look different by the time those rules can be implemented anyway?

Social media presents a wonderful opportunity for those advisers – and providers – that do it well. Put simply, it is a huge ongoing conversation, which everybody would benefit from being a part of.

But rather than embrace this opportunity to promote financial services, it is sad that the regulator feels a need to impose restrictions on it. Especially as the type of restrictions imposed seem unworkable.

You will be familiar with the sort of warnings imposed on financial adverts in the public domain: “Your home is at risk if you do not keep up repayments”, “Past performance is no guide to future performance”, “The value of your investments can go up as well as down”, that sort of thing.

In the traditional media, these warnings are ultimately redundant, rendered in the smallest type possible at the foot of display ads, or read out at ridiculous, incomprehensible speed at the end of a radio advert. Even when people do notice them, the mundane repetition means none of the message’s actual substance registers.

It has been reported that, once the FCA’s required caveats are in place, a tweeter will only have 40 of the original 140 characters left with which to convey their message. This means the warning will at least be prominent, but in reality probably means nobody will bother to go to the effort of condensing anything worth saying to fit. It is hard enough keeping to the 140-character limit, so shoehorning any sentiment into 140 is only going to make it more likely that meaning is lost.

Individuals should be able to assume a tweet from a brand to be marketing without need for flagging it as such. And tweets from individuals – whether adviser or provider – should be taken as part of the ongoing conversation.

The disappearance of ‘caveat emptor’ as a principle is a common bugbear of IFAs, but surely it should apply here. Anyone investing their life savings off the back of a tweet will probably deserve whatever they get.

The focus on Twitter in response to the consultation does ignore other, more expansive media, most prominently (for business at least) LinkedIn. But there, as with Twitter, the conversation flows pretty freely without need for intervention. It is almost exclusively the opinions of senior people from companies. Anything that is overt marketing from a specific brand will typically link to more detailed promotions, elsewhere on the web, which will have scope for all the warnings necessary. There’s no need to clutter up an already restricted tweet.

Regulation is a tricky enough subject as it is. I am not sure why the FCA is going to such lengths to attempt to police an area which is fundamentally impossible to police, at least effectively. This need to be seen to be doing something is a trend that I had hoped had vanished with its predecessor.