The Financial Conduct Authority (FCA) has today published its finalised guidance to clamp down on 'misleading' financial promotions in social media - stating that each post or tweet must be considered individually by firms.
The guidance warned that promotions via social media that fail to be "fair, clear and not misleading" can pose a risk as they could lead consumers to buy the wrong product - leading to undesirable outcomes for them and for firms.
Tracey McDermott, director of supervision and authorisations at the FCA said: "We believe this guidance reflects a sensible approach that allows the industry to innovate using new forms of media and at the same time ensures customers get the right level of protection."
The guidance is designed to assist firms in their use of social media and ensure that they are compliant with the FCA's financial promotion requirements.
Firms are reminded that any form of communication (including through social media) is capable of being a financial promotion if it includes an invitation or inducement to engage in financial activity.
The Finalised Guidance sets out in further detail specific areas that firms need to consider, and provides some solutions and illustrative examples. The rules are an update on previous guidance around financial promotions issued in 2010.
The guidance highlights the following areas:
· Stand-alone compliance - Each communication (e.g. a tweet, a Facebook insertion or page, or web page) needs to be considered individually and comply with the relevant rules.
· Risk warnings and other required statements - Firms are reminded that there are requirements to include risk warnings or other statements in promotions for certain products/services. These rules are media-neutral and therefore apply to social media as they would to any other medium.
The FCA said this poses particular challenges for the use of character-limited social media.
One possible solution to the problem of character limitation is to insert images, including the use of infographics, into communications such as tweets, which allows relatively unrestricted information to be conveyed. The image must also be compliant, the regulator said.
· Image advertising - Firms are reminded that it remains possible to advertise their presence in the market through ‘image advertising' in a way that is less likely to present difficulties with character limits.
· Recipients sharing or forwarding communications - Where a recipient shares or forwards (such as by retweeting) a firm's communication, responsibility lies with the communicator, so in that case the firm would not be responsible. The FCA said firm that any breaches of its rules in the original communication are still the responsibility of the originating firm, and not the ‘retweeter'. Sharing or forwarding by a third party does not ‘cure' any original non-compliance.
· Unsolicited promotions - The FCA reminded firms that are considering sending marketing through electronic media that there are specific legal requirements that they must comply with when doing so. Social media are prime channels for making unsolicited promotions. For such promotions and ‘cold calling' (unsolicited real-time promotions), the FCA reminded firms of the rules that apply.
· Approval and record-keeping - The guidance reminds firms of their obligations to have an adequate system in place to sign off digital media communications. This sign-off should be by a person of appropriate competence and seniority within the organisation, the FCA said.
Advertisers are also required to adhere to the Committee of Advertising Practice Code, which applies to ‘non-technical' elements of financial advertising, for example matters of social responsibility, harm and offence.
The finalised guidance can be read HERE
