FCA sets out its approach to financial promotions in social media 

The Financial Conduct Authority (FCA) has today launched a consultation which is intended to clarify its approach to the supervision of financial promotions in social media.

The FCA’s overall approach is that the financial promotion rules are intended to be media-neutral to ensure that consumers are presented with certain minimum information, in a fair and balanced way, at the outset of firms’ interaction with them. The rules include sector-specific requirements but in each case there is an overarching principle that any communication should be fair, clear and not misleading.

The FCA recognises that social media particularly are powerful channels of communication and therefore of significant value to firms. The FCA does not want to prevent their use. These media allow firms to contact their customers, and vice versa, both pre- and post-sale. However, firms are reminded that any form of communication (including through social media) is capable of being a financial promotion, depending on whether it includes an invitation or inducement to engage in financial activity. Therefore it remains a fundamental requirement that all communications (including financial promotions) are compliant.

The consultation paper sets out in further detail specific areas that firms need to consider, and provides some solutions and illustrative examples. These include:

Promotions for investment products – There is a specific requirement that financial promotions for investment products are identifiable as such. The FCA’s view is that – for social media in particular – it is important that, in all cases, it is clear that a promotion is a promotion. One generally accepted way to do this, for character-limited media, is the use of #ad in online posts.

Stand-alone compliance – Each communication (e.g. a tweet, a Facebook insertion or page, or web page) needs to be considered individually and comply with the relevant rules.

Risk warnings and other required statements – Firms are reminded that there are requirements to include risk warnings or other statements in promotions for certain products/services. These rules are media-neutral and therefore apply to social media as they would to any other medium. When taken into account with the supervisory approach to standalone compliance, this poses particular challenges for the use of character-limited social media. One solution to the problem of character limitation is to insert images, such as infographics into tweets, which allows relatively unrestricted information to be conveyed. However, where the financial promotion triggers a risk warning or other information required by our rules this cannot appear solely in the image.

Image advertising – The FCA reminds firms that it remains possible to advertise their presence in the market through ‘image advertising’ in a way which is unlikely to present difficulties with character limits.
The FCA developed this proposed guidance following engagement with other regulators both in the UK and overseas and other interested stakeholders. The FCA has also had significant contact with industry over the course of the last year to better understand their concerns around the use of social media.

 

Source: FCA

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