The FCA has warned advisers they could get in trouble if they ‘retweet’ or otherwise republish their customer’s messages through Twitter or other social media, where the message relate to product recommendations.
In a 20-page guidance paper published today (13 March) the FCA stated if a firm republishes a customer’s tweet, whether or not it is a financial promotion will depend on the content.
For example, the FCA stated a tweet expressing satisfaction with considerate service received from the firm will not be a promotion, as good customer service is not itself a controlled activity.
However, if the customer’s tweet comments on or endorses the benefits of a regulated financial product or service, then sharing or forwarding by the firm will constitute a promotion. The FCA ruled an advisory firm is then responsible for the content as must reference appropriate warnings.
“If the consumer communication stated, ‘just got a brilliant two-year fixed rate mortgage from Firm X’, and then Firm X subsequently retweeted/shared/liked this communication - there is clearly an action made by the firm which is in the course of business.
“Therefore, the firm’s subsequent communication would then be subject to the financial promotion rules.”
The FCA’s latest paper also put in place stringent rules for keeping a record of and monitoring posts made on social media, placing a compliance burden on firms that some will claim goes against the nature of social media.
According to the watchdog sign-off of “digital communications” should be by a person of appropriate competence and seniority within the organisation. Firms were also told that they need to keep adequate records of any “significant communications”.
This poses particular challenges for networks, some of which have in the past struggled to centrally control and monitor messages. There have even been policies effectively banning social media use.
The FCA stated firms should not rely on digital media channels to maintain records, as they will not have control over this and older material could be deleted. Firms will instead have to have a separate system for recording and keeping communications.
As well as helping to protect consumers, the FCA stated records would enable the firm to deal effectively with any subsequent claims or complaints.
The regulator did admit failings in their previous consultation paper on social media, which included the suggestion that one way to make clear that a post was a financial promotion was the use of #ad.
Following feedback from the industry, the FCA revealed it has now revised it’s stance on this issue. as hashtags are not an appropriate way to identify promotional content.
The FCA admitted use of a hashtag had the potential for consumer confusion as the majority of the information people would have found when clicking through to the content stream using the label would have been irrelevant to the initial communication.
To learn more about social media and earn CPD, read FTAdviser’s Guide to Social Media.