Your IndustryMar 27 2015

Are the FCA social media guidelines helpful?

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Are the FCA social media guidelines helpful?

The FCA recently issued guidance for financial services professionals on how to use social media. We asked whether the FCA had got it wrong on social media?

Yes. Richard Bishop, financial adviser

Social media has come a long way in the five years I’ve been using it. Big financial brands now advertise on Twitter and Facebook. Who would have thought five years ago leading fund managers would consider using Twitter to engage with a fresh new social media demographic? Financial advisers, however, still talk about engagement and sharing ideas with peers.

Advisers should be leveraging the fund managers’ social media strategy and offering advice or planning services. The FCA has noticed the revolution, I’m sure they have no trepidations based on the recent paper on social media. The rules are clear and certain advisers are tweeting every day without recording their tweets as a promotion or considering the FCA promotion rules.

It’s a grey area, the FCA likes grey. The challenge is that advisers need to interpret the rules. A call to the FCA asking for clarification will result in unhelpful directions to the appropriate section in the gargantuan FCA handbook.

There is an element of double standards – you can tweet and add a small disclaimer, but put the same text in the local free newspaper and it would break the rules. You need to record every promotion in detail – it would appear you can tweet and post blogs while adding no risk warnings.

Typically it will take a big problem for the FCA to look at it properly, it’s bizarre to say it, but we need some new rules written in the handbook to take account of the changing world.

No. Bridget Greenwood, director at Financial Social Media UK

When the consultation guidance paper first came out, I admit I was a little disappointed with it and I wasn’t alone. It seems the industry was looking for more. However having spoken to those who deal with regulation in the States and to the regulator – and having taken time to consider the recommendations – I now believe its brevity to be a positive.

Simply put, the regulator is saying, as long as you follow the ‘fair, clear and not misleading’ rule and are not communicating financial promotions, then you are free to do as you like. Firms in the US would love to have a regulator who gave them this much freedom, so this is a real positive.

The FCA is looking to only be concerned where it needs to be.

As social media in particular is not really a medium for selling and promoting your product or services, but rather a place for engagement, leadership, discussion, education, relationship building and influence, to name a few, then financial promotions will naturally form only a small part of your social media strategy.

That said, there is a business merit in using ads on Facebook and Twitter (for example) appropriately. In these instances follow the regulations:

• If you engage in image advertising, ensure that the text on a post and the image are compliant.

• As long as your tweet or post is compliant then you are not responsible for what someone else reshares. In turn be thoughtful about what you reshare or forward.

Social ads can be effective, but above all, you must ensure you use the right software to manage your process and comply with the regulations.