The FCA published its final guidance on “Social media and customer communications: The FCA’s supervisory approach to financial promotions in social media” on Friday 13 March 2015. It’s 14 sides long, and includes 11 reminders for firms. It also includes an effective admission that, when the FCA issued its draft social media guidance for consultation, it didn’t fully understand the social media it was describing.
The draft and final versions of the guidance make the same basic point: the UK’s financial promotions regime is media neutral. So, every financial promotion communicated in the course of business must comply with the rules, even if it’s made in a single tweet.
This is a function of the Financial Services and Markets Act 2000, and the Financial Promotions Order, so it shouldn’t be too much of a surprise. The FCA has, however, decided to amend some of the wider comments and suggestions it offered in the draft version of the guidance. In particular, it has:
- Withdrawn the suggestion that firms should use “#ad” to ensure that financial promotions are clearly identifiable as such – whilst some consultation respondents regarded this as “innovative“, the FCA has accepted that a “significant aspect of the hashtag functionality is that, when clicked on, the consumer will be led to a separate page where all the communications that have used this hashtag will be displayed … There is potential for consumer confusion here as the majority of the information will be irrelevant …, although this may not be immediately obvious to the user … we also believe that the hashtag functionality is inappropriate for the inclusion of risk warnings or statement of jurisdiction [because] the warning or information would be … diminished by the running together of the words … (e.g. #capitalatrisk) and by the link to another page with largely irrelevant material … We have therefore deleted the reference to #ad in the Finalised Guidance“;
- Accepted that one of the examples of a compliant social media financial promotion was not actually a social media promotion; and (at least on one reading) that it wasn’t necessarily compliant either – “The inclusion of a banner promotion depicting standalone compliance produced the reaction that it was not strictly an example of a social media promotion and that the inclusion of the risk warning in the final frame of the banner meant that the example was actually non-compliant. We agree that a banner promotion is not strictly social media: our visual example was intended to illustrate banners appearing on social media websites and how risk warnings/balancing statements can be diminished by their lack of prominence and combination with other text. [Sigh.] Our point is that firms should ensure that relevant text is sufficiently prominent. It was also queried whether supplying the risk warning/balancing statement only on the last frame of the banner was compliant. When assessing the compliance of a promotion that is viewed via a dynamic medium (i.e. the loading of the promotion occurs automatically and without the consumer being required to click for further information to view the standalone promotion), we assess the promotion as a whole and take a proportionate view on the number of frames and where the risk warning/balancing statement is provided within the promotion” (emphasis supplied);
- Expanded its guidance on retweets, ‘favouriting’, ‘commenting’, and ‘liking’ – “In the … Consultation we made the point that all firms should ensure that their original communication would remain clear, fair and not misleading, even if it ends up in front of a non-intended recipient [because] Principle 7 of our Principles for Businesses … applies to all communications to … clients, or potential clients. However, when a communication is retweeted or shared, the responsibility lies with … the user sending the retweet or sharing the communication … If a consumer retweets/shares a promotional communication from a firm and they are not acting in the course of business, then only the original communication from the firm would fall within our remit – the consumer’s subsequent communication would [not]. With regards to firms retweeting, sharing or liking a consumer’s original communication and whether this action can be considered [a financial promotion] they can … For example if the consumer communication stated ‘just got a brilliant two-year fixed rate mortgage from Firm X’ and … Firm X … retweeted/shared/liked this … the firm’s subsequent communication would … be subject to the financial promotion rules. We have expanded our comments on this area in … the Finalised Guidance“; and
- Expanded its guidance on the sign-off and record keeping requirements for digital and social media communications – “Firms are required to have an adequate system in place to sign off all communications, not just digital communications … firms should consider the provisions in our Handbook relating to sign-off and record-keeping … as part of their general approach to risk management“; and “We expect firms to perform risk management in this [i.e. record keeping] area and assess for themselves what they consider ‘significant communications’ to keep records of. When making this assessment firms should bear in mind the need to demonstrate compliance if required to do so, as well as queries and complaints from customers which may require evidence…“.
The FCA’s publication closes by:
- Explaining that the FCA will publish a Discussion Paper “soon“, which explores how the FCA and the industry can work together to deliver information to consumers in “smarter and more effective ways“;
- Inviting stakeholders to share their research and ideas for improving the effectiveness and delivery of information to consumers (an echo of the Bank of England’s “One Bank Research Agenda“?];
- Including a hyperlink to the FCA’s existing “Test ideas for communicating with consumers” website.
Our client alert, which summarises the key principles of the UK’s financial promotions regime is available here.