We’ve heard it all before - if you’re not using social media to reach your audience then you could be missing a trick. If your audience are there, why aren’t you? However, when it comes to the financial services industry, there has always been that lingering risk factor attached to social media with regards to compliance and regulations acting as barrier.
Previously, banks, credit card companies and investment firms were reluctant to wade in the unpredictable waters of social media however in line with the growth of social media as well as clear benefits of getting involved from a customer service perspective, the Financial Conduct Authority (FCA) finalised its guidelines for all financial promotions in social media.
With financial firms relatively new to the social media marketplace, we’re taking a look at the new regulations to help keep you on the right side of the law…
Back to basics
Social media for financial services addresses customer urgency and encourages customers to be more engaged with the organisation however the Financial Conduct Authority (FCA) are clear on their guidelines when it comes to financial promotion on social channels. Any form of communication is capable of being a financial promotion, depending on whether or not it includes an invitation or inducement to engage in financial activity. All communications must be ‘fair, clear and not misleading’ otherwise this could lead consumers to purchase the wrong product thus, resulting in unhappy outcomes for both them and the organisation.
Covering responsibility for compliance when it comes to retweets and sharing others’ posts across social channels, record keeping and approval as well as the use of hashtags, the FCA guidelines are detailed in the 20 page document released in 2015 but today we’re looking at the most important points from the regulations here.
(Psst. for more information you can read the full set of guidelines here).
In the course of business
Of course it’s great to have your employees engage with your brand and content online however personal communications and personal social media accounts of staff should be clearly distinguished from that of the organisation. Advising staff to include statements such as all views are my own and do not reflect the views of the company’ or similar could do the trick. If this is not added and staff send communications which could be considered an invitation or inducement, the FCA may consider this a financial promotion and the individual may be subject to the same penalties as the firm would.
Hashtags and identifying promotions
Financial promotions are by no means banned on social media however organisations must include risk warnings. The use of hashtags (i.e. #ad) to indicate promotions was debated and the FCA decided that these are not an appropriate way to identify promotional content. With more and more organisations engaging in paid social media advertising, this is already outlined as paid content such as ‘sponsored’ on Facebook and ‘promoted’ on Twitter and the addition of #ad would not be required.
Aside from hashtags to indicate adverts, the FCA were unsure of hashtag usage as a whole. As hashtags are used to find other similar content, when clicked on, this will take the user to content completely outwith the control of the organisation and could lead to customer confusion as to whether it is linked to the original post or not.
Are retweets considered as financial promotions and if so, who is responsible? Do liking and commenting on other posts constitute financial promotion? The FCA have outlined the responsibility ultimately lies with the communicator (the user sending the retweet or sharing the communication). If a firm retweets or quotes a consumer’s tweet indicating how great an offer they received from an organisation, this displays clear commercial interest in distributing the content, thus, the organisation who re-shared would be liable and subject to the financial promotion rules.
Image advertising and risk warnings
We all know the 140 character limit on Twitter and we often have to get creative in our writing to cover everything we have to say. A workaround is often including some of the information in an image however there are restrictions imposed by the FCA when it comes to this - every communication must carry a risk warning making this very difficult. If the main promotion overpowers the risk statement within an image, this would be considered non-compliant with the FCA regulations.
Similar to print regulations for the promotion of financial products and services, there is also a requirement for risk warnings on social media. Similar to what we mentioned above, a way to get around character limits is to include images however in themselves, these images must be compliant too. As there is the functionality to turn off images on Twitter, if the financial promotion has a risk warning, this cannot appear solely on the image itself.
Approval and record keeping
When it comes to all digital communications of a sensitive nature, the FCA has stated organisations are obliged to have an adequate sign off process for digital media communications as well as keeping records of all ‘significant communications’. This will both help consumers as well as covering the company should any claims or complaints come to light in the future. The FCA has stated social media channels should not be relied upon as storage for customers complaints, significant queries or data as updates are made regularly and older material could be deleted.
Like any other industry focusing on customer service and building relationships, the financial sector is slowly turning to digital and social media to remain competitive. With these new regulations in place from the FCA, financial organisations are now viewing social media as more of an opportunity than a hazard and financial investment company Charles Schwab has achieved more than 100,000 likes on Facebook by balancing self-promotion and helpful advice on investment with the help of a very competent marketing team.
Providing financial firms comply with the above regulations, they can be on their way to social media success. Want to know our top tips for complying with the regulations? Keep your eyes peeled here over the next few days for our downloadable top tip filled whitepaper.