The FCA creates a ‘Minefield’ following Social Media Restrictions

Enjoy Digital
By Enjoy Digital
5 minutes to read

Following a guidance consultation for the financial industry in August, the Financial Conduct Authority (FCA) has published further recommendations, intended to clarify its approach to assist firms with their approved use of financial promotions in social media.

The regulator was asked for further clarification on what could be perceived as a financial promotion, and where would the responsibility lie with regards to re-tweets, forwarding and sharing.

It has been the subject of much debate, and some advisors have stated that the FCA’s final guidance on financial promotions in social media has created a “minefield” for firms wanting to share customer feedback and take a proactive approach to social media engagement.

So, if you’re a financial services firm, to ensure that you remain fully compliant when re-tweeting and sharing your customer’s feedback, here’s what you need to know:

Communication Responsibility

The regulator clarified that when a communication is re-tweeted or shared, the responsibility lies with the communicator, not the author of the tweet, so to ensure that the tweet is compliant, fair and not misleading.

Financial Promotions

The FCA confirmed that a firm re-tweeting, sharing or liking a consumer’s post could be straying into the financial promotions rules, which could be considered an inducement or an invitation.

Social Content

When re-tweeting a customer’s tweet, whether or not it is a financial promotion will depend on the content of the tweet. If a firm re-tweets a customer’s tweet, expressing satisfaction with good customer service, this is not a financial promotion and would therefore be deemed to be fully compliant.

Sharing Regulations

The FCA sites an example of a company re-tweeting or liking a post from a consumer; ‘Just got a brilliant two-year fixed rate mortgage from Firm X’, and then Firm X subsequently re-tweets/shares/likes this communication.

This is defined as a business action made by the firm, as although it is in their commercial interests to distribute the original communication, the FCA said that “the firm’s subsequent communication would then be subject to the financial promotion rules”.

The FCA creates a ‘Minefield’ following Social Media Restrictions

Social Engagement

If a consumer re-tweets a promotional communication from a firm, and they don’t have a commercial interest in the tweet, then the consumer’s subsequent communication falls outside of regulation. The original communication would still need to be compliant with the FCA’s guidelines.

The FCA creates a ‘Minefield’ following Social Media Restrictions

The FCA, whilst aiming to clarify its approach to financial promotional best practice use, they seem to have muddied the waters of proper social media usage for financial services. It may also be limiting the advantages that firms can gain from engagement with their customers on social media.

Social media is based on unrestrictive real time interaction and engagement, particularly for firms and their customers who use social as a direct means of contact. Re-tweeting is a great form of engagement on Twitter as it shows followers that companies are paying attention and listening to their views.

Consumers are also increasingly using social media to discover what other people have to say in regards to their experiences before purchasing products and services. The recent updates to the FCA’s guidelines although intended to help firms embrace social media may actually be more restrictive as the financial sector lacks the confidence to harness positive feedback for fear of FCA repercussions.

Read the full FCA guidelines here.

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