Financial services firms have been warned of the need to include risk warnings when mentioning certain products or services on social media.
Guidance published by the FCA said the requirements for risk warnings were “media-neutral” and applied to social media as much as any other medium.
The regulator’s guidance admitted this posed “particular challenges” for character-limited forms of social media such as Twitter.
Tracey McDermott, the FCA’s director of supervision and authorisations, said: “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.
“We have had extensive industry feedback during our consultation. This guidance reflects a sensible approach that allows the industry to innovate using new forms of media and ensures customers get the right level of protection.”
The FCA has said a possible solution to the problem of character limitation would be to include images, including infographics, in messages such as tweets but it has warned that these images would also have to be compliant.
Its 20-page guidance document considers the use of financial promotions in social media, including the definition of a promotion.
For example, the regulator has ruled that a tweet from a customer expressing satisfaction with considerate service will not be a promotion, as good customer service is “not itself a controlled activity”.
Meanwhile, the City watchdog has warned that messages that are retweeted, or shared or forwarded on by someone who reads them, remain the responsibility of their original author.
So a firm or individual which retweets a non-compliant communication will not be liable for any breach of the FCA’s rules.
Firms also need to have an “adequate” sign-off procedure for social media messages with a “person of appropriate competence and seniority” controlling them.
Adviser view
Pete Matthew, managing director of Cornwall-based Jacksons Wealth Management, said: “I am glad they have not been stupid and tried to lock it all down and make it unusable, which is where the American regulator had gone.
“They are trying to protect individuals, but I do wonder how much ordinary people are really likely to make buying decisions based on a tweet or Facebook message.”
