Use of social media in financial promotions. Staying onside of the regulator

  • Use of social media in financial promotions. Staying onside of the regulator

    /images/neil_july_2012.jpg

    Alternative Finance businesses need to maximise the use of social media to get their brands in front of the widest possible relevant audience, but it presents regulators with a headache.  Instantaneous, viral and occasionally irreverent, putting a framework around social media for financial services businesses must be like knitting fog.

    The good news is that, in my view, the FCA is taking a pragmatic rather than headmasterly approach. All the signs of the consultation that it has now kicked off show that it understands the medium and the benefits it can bring to providers and consumers alike.  The FCA says that it recognises that social media encourages choice and competition by allowing smaller providers to compete with the more established brands. Thank heavens for that.

    What qualifies as a financial promotion?

    Any form of communication is capable of being a financial promotion.  The acid test is: is it an invitation or inducement to engage in financial activity?  If it is, then it's a financial promotion.

    For example:

    Go to www.mortgages.co.uk to see our mortgage offers - is compliant

    Go to www.mortgages.co.uk to see our great mortgage offers - is non-compliant because use of the word 'great' is deemed an inducement (Don't blame me, I'm just passing it on).

    Basic principles

    The FCAs guidance on financial promotions is media neutral so social media gets no special exemptions from the basic principle that any communication must be fair, clear and not misleading; it must balance the benefits and risks; and provide consumers with certain minimum information. In addition, there must be adequate risk warning, with adequate prominence, and the 'past performance rule' applies.

    So, how do you achieve all of this in a character limited environment like Twitter or Facebook?

    Staying on the right side

    The FCA provides some useful advice that can be adopted as best practice.

    • Signpost a product or promotion with a link to more comprehensive information - remember through that the promotion must remain compliant itself
    • Use of image advertising e.g. a picture with the compliant terms in it or a dynamic banner that has the warnings at the end of the sequence
    • Use the hashtag #ad to clearly identify a financial promotion
    • Use software that allows adverts to be accurately targeted on specific user groups

    What happens if your post is 'liked', 're-tweeted' or otherwise shared?

    Fortunately, it is decreed that a business is not responsible for how it's posts are shared providing the original post is compliant.

    If you are the sharing business, for example, you might want to share some positive client sentiment or a journalist tweeting their article about you, you must make sure your retweet is compliant as your business is judged to be the communicator.  Got it?

    I think it's worth squeezing in at this point that somebody liking your business on Facebook or following it on Twitter does not, in itself, establish an existing client relationship for the purposes of unsolicited promotions.  You will still need specific consent if you're going to market to them.

    Establishing your processes

    There are three reference documents that are worth having to hand:

    1. The Law Society's guidance notes on social media.  These were written to keep law firms on the right side of the law, but the principles can be adapted and adopted in any business
    2. The FCAs consultation document. This expands on the notes outlined above and provides a number of pictorial examples
    3. The Advertising Standards Authority's CAP codes on standards in advertising

    Other guidance is to have an appropriately senior person in place to sign off digital communications and to keep adequate records of significant communications.

    All of this doesn't, in my personal view, mean that every tweet and Facebook post has to be signed off in triplicate in a financial services business.  Once adequate training has been provided and a framework of acceptable and unacceptable posts has been established, it should be possible to allow social media to operate relatively freely within an organisation.  Prior sign-off of key promotional posts for the week or month by the compliance manager would be sensible and there should be a regular sampling process in place to quickly spot transgressions.

    The FCA consultation closes on 6 November and we'll provide an update with any significant announcements then.

Related articles

  • Read More

    Bank Referral Scheme - is 3% success, success?

    We suspected that the Bank Referral Scheme was going to be a slow starter when, five months ago, The Marketing Eye asked the Treasury’s Press Office how it was getting on. Despite the fact that no...

  • Read More

    Peer-to-peer lenders should not fear APRs

    Following the Competition and Markets Authority's (CMA) announcement that the new pricing rules on business loans will not apply to peer-to-peer lenders, some are heaving a hefty sigh of relief,...

  • Read More

    Peer-to-Peer lending passes £10 billion mark

    Peer-to-peer lending has reached a significant milestone since Zopa launched the world’s first P2P platform in 2005. Over £10 billion has been cumulatively lent across 23 UK P2P platforms....

  • Read More

    Peer to Peer featured in Queen's birthday honours

    Good to hear that the pre-eminent pioneers of P2P lending in the UK are receiving formal recognition for their outstanding achievements. Described an a ‘Peer to Peer and Financial Inclusion...

  • Read More

    New Fintech Collaboration: Xero + Liberis

    Liberis, the card based finance provider, has announced an integration with Xero, the UK's leading online accounting software, to improve small businesses’ access to capital and credit....

  • Read More

    Consumer debt rises while businesses save

    Soaring levels of consumer debt are evidently causing the Bank of England, the Government and others in authority some sleepless nights. According to a recent report in The Guardian, the number of...

  • Read More

    Liberis and Sage launch Sage Pay Business Finance

    Sage Pay has teamed up with alternative business finance provider, Liberis,to give Sage customers access to flexible financing for the first time....

  • Read More

    ArchOver receives FCA authorization

    ArchOver, one of The Marketing Eye’s longest standing clients in the alternative finance sector, has been granted full authorisation by the Financial Conduct Authority (FCA). The news represents a...

  • Read More

    Australian Budget sets scene for FinTech growth

    The latest Budget statement from ‘down under’, on May 9, reaffirmed the Australian Government’s intention to turn the continent into a global fintech centre....

  • Read More

    FinTech as a force for good

    Kids, they say, grow up quickly and nowhere is this more true than in FinTech. Barely five years ago, the phrase wasn’t even invented. Now it is the collective noun for billion dollar enterprises,...

Take the first step

To find out more about how we can help you grow faster, please get in touch. We'd like to hear from you.  Or try our instant marketing healthcheck, it's free!

Quick Contact

Quick contact

Close

Contact us

T 01825 765617

E hello@themarketingeye.com

Our offices

Full details of our offices in London and Uckfield more

Request a call

Close