On March 13, the UK regulator, the Financial Conduct Authority (FCA) published finalized guidance on its supervisory approach to financial promotions in social media (the “Guidance”). The range of social media within the FCA’s consideration includes: blogs, microblogs (e.g. Twitter), social and professional networks (e.g. Facebook, LinkedIn, Google+), forums, and image and video-sharing platforms (e.g. YouTube, Instagram, Vine, Pinterest), though the FCA states that the Guidance covers any “websites and applications that enable users to create and share content or participate in social networking.”
The FCA consulted on the proposed Guidance in August 2014 and the finalized published guidance is intended to help FCA-authorized firms understand how they may use social media in compliance with the FCA’s strict rules on the promotion or advertising of financial products or financial services. (The Guidance is a follow-up to guidance issued in September 2011 setting out the FCA’s previous expectations on prominence and providing examples of good and poor practice.)
The FCA recognizes that social media is a particularly powerful channel of communication and therefore of significant value to firms. The FCA does not want to prevent its use as such media allows firms to contact their customers, and vice versa, both pre- and post-sale. However, FCA-authorized firms (and others whose communications are directed at UK persons) must remember 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 and, if it is a financial promotion, must be in compliance with FCA rules.
Within the Guidance there is a summary of feedback that the FCA received from industry participants during the consultation process. The summary highlights how most people responding to the FCA considered that the FCA’s approach was helpful, but the Guidance goes on to provide visual examples and it also clarifies certain areas in response to the feedback, including:
- when re-tweets, forwarding and sharing can be considered to be a financial promotion, and circumstances when this can be done;
- a clarification that the inducement and balancing statement or risk warning needs to be within an inserted image;
- a discussion on “click-throughs,” and how the FCA assesses such processes in the social media context;
- an explanation of how certain media is viewed as a whole for stand-alone compliance;
- the difference between personal and business-related posts or tweets;
- the FCA’s stance on using hashtags to distinguish tweets as promotions; and
- a reminder that the FCA’s existing requirements apply equally to social media.
Click here for the latest Guidance.
Click here for the September 2011 guidance.