New FCA guidelines regarding the use of social media by financial services companies are due for publication in the coming weeks.
The industry is holding its breath as it waits to see what is produced. What is required is a more detailed set of directives on social media interaction and the management of risk associated with digital media channels.
New media or digital media has been with us as a marketing and promotional tool for many years. However with the increased popularity of social media, including Facebook and Twitter, the finance sector is being constrained by the need for compliance in terms of its use for promotional and customer relationship purposes.
The existing guidelines for the use of digital media in financial services companies were produced in 2010 by what was then the FSA. In April 2013, when the Financial Conduct Authority and the Prudential Regulation Authority took over from the FSA, new guidelines were promised, and are due this quarter.
Very limited in scope, the original guidelines simply state that promotions and communications by financial services organisations using new media need to meet the requirements for stand-alone compliance.
This means that every social media post by a financial services business could be construed as a digital financial promotion. Therefore every post has to fufil the FCA’s regulations on its own.
It must outline potential benefits against possible risks and contain all the required information within the same place. It is not acceptable simply to provide another source for more detailed information. This is a tall order in anyone’s book when using social media.
The new guidelines from the FCA will need to reflect emerging reliance on social media channels by financial institutions to attract and acquire new customers, yet maintain compliance for the protection of organisations and customers alike.
This will not be an easy task, but regulators should require financial services organisations to have:
* A social media policy that is consistent with an organisation’s contracts of employment;
* A record of every social media post to ensure both corporate and FCA policies have been adhered to;
* A review of all outbound content either carried out internally or by a suitable nominated third-party provider;
* A proven ability to manage third-party posts from consumers on both social media channels and corporate websites;
* A policy that clearly states that advisers’ and employees’ personal social media accounts are treated in the same way as professional accounts;
* Central control of social media accounts with full audit trails to minimise risk.
The new digital media guidelines from the FCA are eagerly anticipated and will hopefully make it easier for advisers to take advantage of social media.
Simon Ryan is a director of Social Advisors