Managing Social Media within Financial Services Guidelines
Developing promotions within financial services is crucial to generating awareness of products and services that allow consumers to make informed purchase decisions, as well as being heavily scrutinised by the Financial Conduct Authority to ensure that they meet TCF guidelines.
According to the report from tollfreeforwarding.com 77% of consumers consult ratings and reviews before making a purchase and 80% expect businesses to be active on social media.
So if social media is an important part of how you promote your business, how should you manage this effectively to ensure you are working within the financial promotion rules?
The FCA Guidance
The FCA consultation report on Social Media and Customer Communications accepts that firms within the industry need to use social channels to promote their business, but this still has to be done with due care towards TCF and being fair, clear and not misleading. Three of the six consumer outcomes that the FCA expect TCF to achieve are directly relevant to financial promotions. They are:
Products and services marketed and sold in the retail market are designed to meet the needs of identified consumer groups and are targeted accordingly.
Consumers are provided with clear information and are kept appropriately informed before, during and after the point of sale.
Consumers are provided with products that perform as firms have led them to expect.
The FCA accepts that social media is a powerful and valuable form of communication and it allows firms to reach a wider audience; increase awareness and knowledge as well as permitting two-way communication pre- and post-sale, so they do not want to prevent its use. However, they do want to make clear that communications through social channels are still capable of being a financial promotion depending on whether or not is includes an invitation or inducement to engage in financial activity.
Recommended Best Practice
If you are planning to use social media as part of your marketing strategy, understanding and working within the guidelines that the FCA have set out are essential for your business.
With some social channels having character limitations, it’s important to have a clearly defined strategy for how what channels are most appropriate for reaching your target audience and how they will be used, for example; blogs on your website are not character limited and therefore allow you to provide more information and add any relevant risk warnings that need to be included. Twitter on the other hand has a 140 character limit and therefore whilst there are ways in which you can creatively add warnings if you are promoting a particular product or service, we would recommend using this medium to signpost to more detailed communication such as a brochure, guide or webpage. Please note that the ‘signpost’ copy must also be compliant in its own right.
If you do intend to use character limited channels for advertising investment product, they must be identified as a promotion. The FCA will accept the use of #ad in these cases.
The use of images and infographics in social media promotions may, in some cases, help to convey the promotion more clearly. The image or infographic along with any advert copy must be compliant, but it allows you to be more creative with the way in which you deliver the promotion using social channels.
Other Issues and Considerations
Social media is inherent for speed of delivery and sharing – that’s one of the core benefits of using it and gaining wider audience participation or interaction for your brand and the services you provide. However, under the guidance there are elements you need to be aware of:
Sharing and Retweeting – you are ultimately responsible for the communication you produce, its accuracy and ensuring that attention has been paid to the rules governing the promotion. However, the responsibility of retweeting or sharing a communication that you have produced is lies with the communicator.
Customer Comments – if you share or tweet or retweet a customer’s comment, you as the firm are responsible for communicating this even though you did not produce the comment or communication. Depending on how you received this communication may also require you to seek ‘permission’ from the originator to use this via your social channels.
Real Time - you should be aware of ‘real time’ communication rules and whether or not this affects your digital communications. Whilst they take place in ‘real time’ digital communications may not fall within the definition outlined under article 7 of the Financial Promotion Order (FPO) 2005.
Unsolicited Promotions – using social media for unsolicited promotions must follow the rules as outlined by the FCA. You must have established a relationship with the client or prospect and have their permission to send financial promotions directly to them. Someone ‘following’, ‘sharing’ your ‘liking’ your social communications does not fall into the category of an ‘existing relationship’.
Approvals and Record Keeping – as with all financial promotions, you will need to maintain adequate systems and controls for approval and sign-off of your digital communications. Generally speaking some online content can be timeless and you may not be in a position to ensure that anything which may have gone out of date can be removed once it has been published. It is your responsibility as a regulated firm or individual to maintain records to ensure that the communication or promotion was compliant at the time of issue.
Advertising Standards – when producing promotions, you must ensure they also adhere to the ASA Committee of Advertising Codes of Practice for non-technical elements of financial advertising.
As you can see, understanding and managing your digital promotions including social media within the finance industry rules and regulations can be complicated. However, the recognition is there that this is an essential commercial tool for interacting with your clients and target audience.
If you don’t have the in-house resources in place to help you with your online marketing strategy, getting specialist advice in this area will help ensure you are able to manage your promotions within the guidelines as well as getting your brand and message out in the most effective way.