FCA outlines social media promotional guidelines

The Financial Conduct Authority (FCA) has published its guidance on financial promotions in social media. 

The guidance is designed to assist firms in their use of social media and ensure that they are compliant with the FCA’s financial promotion requirements.

Tracey McDermott, the FCA’s director of supervision and authorisations, said: “Social media is already an important tool for industry to engage with customers and its use is only set to grow.  Financial promotions, whether on social media or traditional media, must give customers the right information and meet our requirements to be fair, clear and not misleading. We have had extensive industry feedback during our consultation.

“We believe this guidance reflects a sensible approach that  allows the industry to innovate using new forms of media and at the same time ensures customers get the right level of protection.”

Firms are reminded that any form of communication (including through social media) is capable of being a financial promotion if it includes an invitation or inducement to engage in financial activity. All communications (including financial promotions) must be fair, clear and not misleading. Promotions that fail to be ‘fair, clear and not misleading’ can pose a risk as they could lead consumers to buy the wrong product – ultimately with undesirable outcomes for them and for firms.

Communications through social media can reach a wide audience very rapidly, so firms should take account of that in their decision to promote through social media, and when deciding the nature of their promotions. Firms should ensure that their original communication would remain fair, clear and not misleading, even if it ends up in front of a non-intended recipient (through others retweeting on Twitter or sharing on Facebook). One way of managing this risk is the use of software that enables advertisers to target particular groups very precisely, the FCA said.

The requirement to be fair and not misleading requires balance in how financial products and services are promoted, so that consumers have an appreciation not only of the potential benefits but also of any relevant risks. Firms should consider whether it is appropriate to use character-limited media as a means of promoting complex features of financial products or services. It may be possible to signpost a product or service with a link to more comprehensive information, provided that the promotion remains compliant in itself. Alternatively, it may be more appropriate to use ‘image advertising’ to promote a firm more generally.

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

Advertisers are also required to adhere to the Committee of Advertising Practice Code, which applies to ‘non-technical’ elements of financial advertising, for example matters of social responsibility, harm and offence

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