08 Aug 2014 Was the FCA’s guidance on social media worth the wait?
This week, the Financial Conduct Authority (FCA) released its guidance on using social media for financial promotions. The guidance was due to be released in the first quarter of 2014, so was it worth the wait?
In many ways – no. Much of the FCA’s guidance was fairly self-explanatory. Ensuring that all communications are fair, clear and do not mislead consumers or that there should be a distinction between personal and business communications should come as no surprise.
However, the report did contain a number of handy tips to help firms harness social media, whilst ensuring their behaviour is compliant. The FCA’s view is that social media can be beneficial for the financial services sector if used in the right way. It can play an important role in fostering competition as well as increasing consumer knowledge. Some of the FCA’s top tips included:
- Using the hashtag #ad to identify financial promotions for investment products as such
- Embedding images to overcome restrictive character limits on platforms such as Twitter and to provide more comprehensive information about products. However, the FCA did stress that if the product does have an associated risk warning this information cannot be conveyed in the image alone
- Making use of specialist software to help advertisers target particular audiences
- Reminding firms that ‘image advertising’ is an effective way of promoting their presence in the market through some great examples of compliant and non-compliant Instagram photos
- Advising firms that they are responsible for the content when retweeting another user (for example of a customer)
A critical point in the guidance was the overt message that organisations need to have a fit for purpose system for archiving social media communications. Even large financial services brands are still using time consuming, manual means of keeping track of conversations with customers. Pasting screenshots into a spreadsheet is still common even while there is a clear governance need to ensure consistent error free archiving. Not just for brand protection but most of all to ensure communications are clear, fair and not misleading.
In many ways, the way the guidance was delivered was more interesting than the content itself. The FCA tweeted key points from its Twitter account and used Storify to compile a summary of the report – an effective means of ensuring the content was both digestible and easily sharable. The FCA is also using social media to further its consultation on the report, asking people to tweet using the hashtag #smfca. Views so far have been divided. Whilst some praise the FCA for issuing guidance, others rightly feel that it did not go far enough in helping financial services firms to really embrace social media.
The real value of the FCA’s new guidance is in helping firms understand what a compliant promotion looks like. And to outline what does and does not constitute advice. This has been a grey area for too long. The FCA could go further, but by sharing pictures of what good looks like, it has taken a valuable step forward.
Hopefully this won’t mean brands start bombarding customers with promotions. But rather take an agile approach to understanding what will resonate with their customers, optimising their communications accordingly.
Perhaps now marketers in the financial services industry will reassess their risk appetites and start to use social in more creative and effective ways.