As we all know, customer communications from financial services organisations are highly regulated by the FCA, as well as having to comply with requirements relating to consumer engagement imposed by law and other regulators such as the ASA. There are therefore many requirements firms in this sector need to consider when reaching out for either business development or customer services purposes.
But how do you do that in 140 characters for twitter, or a 6 second Vine?
The FCA started consulting on this fast moving issue all the way back last summer. The result is a 20 page document setting out their approach to financial promotion in social media.
As with all business engagement, the issue is often to determine whether something is a regulated activity – whether a tweet or a retweet from a FS employee is technically financial promotion, for example. The FCA’s press release summarises the guidance as covering:
- Re-tweets, forwarding and sharing – what is perceived as a financial promotion and can this be done compliantly?
- Inserting images – clarification that the inducement and balancing statement/risk warning needs to be within an inserted image.
- ‘Click-through’ approach – a more detailed explanation of why we have not taken this approach and the European Directive constraints we are subject to.
- Dynamic functionality – an explanation of how certain media are viewed as a whole for stand-alone compliance.
- ‘In the course of business’ – further explanation of the difference between personal and business-related posts/tweets.
- #Ad – an explanation of our stance on using hashtags to distinguish tweets as promotions and their use in general within financial promotional content.
- Approval and record-keeping – a reminder of our existing requirements, which apply equally to social media, and risk management within the framework of SYSC (Senior Management Arrangements, Systems and Controls).
The guidance acknowledges the importance of social media and states that the FCA do not want to prevent its use. But whilst all of the guidance is useful, and indeed vital for any financial institution using social media, perhaps the area of biggest concern is hidden almost at the end of the guidance. It states:
“We remind 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”.
Organisations can draw up policies and procedures to comply with the requirements of the legislation, but they need to ensure that all staff comply with them. In our experience, issues often arise not because of a strategic decision not to comply with regulation, but because individuals are drawn in by the informal nature of social media, and forget that they are working within a regulated, or even public environment.
For more on our work on social media, and the training that we can provide for employees click here.
For more information contact Gayle McFarlane who is a lawyer with Cordery in London where her focus is on compliance and technology law issues.
Gayle McFarlane, Lexis House, 30 Farringdon Street, London, EC4A 4HH
Office: +44 (0)207 118 2700