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Using social media and meeting FCA requirements

This article is part of
Guide to Social Media

If you create a social media profile on any platform, Nina Stenning, head of marketing communications at Openwork, says you must include all the usual disclosure in your profile, such as status, fee details, mortgage warnings, and such like.

“Get it approved and expect it to be monitored. Even after you’ve set up a compliant profile, social media presents its own set of compliance risks.

“These stem from the instantaneous nature of social media - you can communicate with thousands of people, and respond to comments, in seconds - and its permanence - a record of your tweets and posts often remains online, even after deletion.”

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The micro-blogging platform Twitter has become particularly popular, but its enforced brevity poses the most obvious risks.

Twitter imposes a strict 140 character limit for updates or ‘tweets’, which Ms Stenning warns makes it impossible to include the required warnings or caveats in individual tweets.

If you tweet about a new mortgage deal, for instance, the FCA would deem it to be a non-compliant financial promotion, even if your Twitter profile contains the relevant mortgage warnings.

The space Twitter affords for your profile information is also limited to just 160 characters, leaving little space for any meaningful description once regulatory requirements have been met.

Ms Stenning says: “The FCA’s stance over social media is intensifying, particularly on Twitter, and we can expect to see much greater attention from the regulator in this area for the foreseeable future.”

Stephen Gazard, managing director of Sesame Bankhall Group, agrees social media represents a “fantastic new marketing tool”. In particular, he says Twitter allows advisers to engage in market dialogue and debate and “position yourself as a ‘thought leader’ in your industry”.

Once again, however, it is the spectre of financial promotion rules that offer a notable caveat. Mr Gazzard says if a firm promotes any product or service it is responsible for making sure that it complies with FCA rules, “just as it would be for any other form of financial promotion”.

From a compliance perspective, Mr Gazard states the vital thing is that any messages need to be clear, fair and not misleading, just as other forms of advertising have to be.

In addition, Helen Turner, distribution and development director of Tenet, cautions you cannot use social media to give any specific financial advice and you must be authorised to advise on any products and services you talk about, like for example equity release or international investments.

In terms of how to best utilise social media, Karen Barrett, chief executive of Unbiased, says advisers really need to look at their own business and decide what it is they want to get out of social media.

“The best users of social media are those with interesting profiles - they have clear opinions, update regularly and interact with others. This last part is key.

“Those who ‘give’ on social media are more likely to be successful, so get involved in others’ debates, answer their questions and ‘like’ their updates.