Social media is a powerful and growing communications tool for us all . The Financial / Insurance regulator has published new guidance on the use of platforms such as Twitter and other Social Media.
The Financial Conduct Authority (FCA) said it recognises the importance of social media but has set guidance to ensure finance firms comply with rules around promotions.
After talks with insurance and Financial sector members, the FCA said it has come up with a sensible approach that allows the industry members to innovate using social media and, at the same time, ensures customers get the right level of protection. The FCA warned firms that any communications, including those using social media, is capable of being a financial promotion. As a result, it must be “fair, clear and not misleading.”
See the full FCA guidance here.
READ MORE ABOUT SOCIAL MEDIA IN THE FINANCE SECTOR
- The Financial Conduct Authority (FCA) has raised concerns over the use of social media by finance firms to engage with consumers in the financial services sector
- Social media will become a significant channel for retail banks and insurance companies in Europe within three years, according to analyst Ovum
The FCA noted that a lot of their members perceive difficulties, when using character-limited forms of social media such as Twitter, in complying with some of the FCA rules. This includes the financial promotion rule, which states that it must be made clear when a promotion is a promotion. 140 character just isnt enough to ensure compliance, and Compliance officer and marketing departments are working hard together to ensure the messages are right. And if the FCA are doing this the other Industry Regulators are likely to follow suit if they have not already set up their own guidance
In its latest guidance, the FCA said firms should consider whether it is appropriate to use character-limited media as a means of promoting complex features of financial products or services. It may be possible to signpost a product or service with a link to more comprehensive information, provided that the promotion remains compliant in itself, according to the guidance. Reading between the lines we think , it may be more appropriate to use image advertising to promote a firm more generally, rather than try to be compliant in 140 characters. The FCA also warned that firms need to ensure promotions are fair, even if they reach a recipient they were not intended for via shares ( Facebook and Linked in ) and retweets (Twitter).
The FCA guidance states: “Firms should ensure that their original communication would remain fair, clear and not misleading, even if it ends up in front of a non-intended recipient”. One way of managing this risk is the use of software that enables advertisers to target particular groups very precisely. Social media in the finance sector has matured greatly since the early days when I started as an IT manager in 1999. In 2009, at a behind closed-doors meeting of bankers, social media experts and technologists at The Financial Services Club revealed how the sector which traditionally leads technology innovation views social media technology. The event, held at the Lloyd’s building in London, delivered a clear message that banks must embrace social media. But work needs to be done by the FCA members to work out how and where to use it.
Here are some of the comments made back then:
- “Social media is the plumbing of collaboration.”
- “Twitter is interesting but I do not know why. It is interesting because people are using it.”
- “If you want to adopt social media you need to listen to what people are saying about it by monitoring online discussions.”
- “Businesses can facilitate customer services through social media but it is not the answer to everything.”
- “Most businesses in this country are one-man bands and most of these are online. They would like to be able to run their businesses online, including dealing with banks and the tax office, for example.”
- “Banks will have to get used to the idea that there will be some customers will want to use the web.”
- “In 1923 the head of the Post Office said he could not see any uses for a telephone apart form calling servants.”
- “Corporates are already monitoring data feeds to see what people are talking about through mechanical scanning of social media feeds.”
- “In financial services we are still in the educational phase.”
- “There will be a bonus for banks that experiment early with social media.”
- “Banks can’t experiment because of heavy regulations.”
- “Social media is a good way of engaging with employees as well as customers.”
- “How does social media transfer to the corporate context is what banks are trying to understand. There has to be a new way found for doing this.”
- “I am not certain [banks] are in a position to use social media credible.”
- “A lot of it is total bollocks.”
- “Once a customer question has been answered by a corporate through a social media site it doesn’t have to be re-answered again and again.”
- “We do not deny that this technology will be used by us but to do this will require things we do not know.”
- “Banks could start working with third parties for technology because it is hard to change legacy systems.”
- “Two banks ask me to build a community for them every week.”
- “If the way to make money out of social media was obvious Facebook would be doing it.”
- “The designed for purpose of technology in banks is never the purpose it is put to.”
- “We might make a product designed for loans and it could end up being used for payments.”
In the mean time if you in the sector and not being careful, it pays to see what is distributed in the customer area of the site , where FCA take this and fraudulent scams very seriously. Check out these consumer pages that teh FCA publish: