The U.K. Financial Conduct Authority (FCA) published its finalised guidance about how brokers should be using social media for promoting their services in compliance with regulations. The document was published after extensive consultation with the industry and provides more clarity as to how existing regulations in this space should be interpreted by FCA regulated firms.
In 2010, the U.K. financial regulator had already published a guidance, but the rapid technological development in the space and an ever-changing environment prompted an updated version.
The FCA recognises that social media are powerful channels of communication and of significant value to firms and do not want to prevent their use. 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.
FCA’s Director of Supervision and Authorisations, Tracey McDermott, 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,” she explained.
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The Finalised FCA Guidance Document
The final version of the document published by the U.K. financial industry watchdog demonstrates examples of acceptable and unacceptable financial promotions. The guidance encompasses blogs, microblogs like Twitter, social networks like Facebook, LinkedIn and Google+, forums and image and video-sharing platforms like YouTube, Instagram, Vine and Pinterest.
The FCA has not published an extensive list of all platforms which it deems as social media, referring instead to the Oxford Dictionary for a full definition of the term.
While communication through the modern social media channels by financial firms can greatly boost transparency, the tools available at the disposal of the companies can also be misused to induce the public to engage in financial activity.
Appropriate risk disclosure of financial promotions in a fair, clear and not misleading manner is the main goal of the FCA. Due to the wide reach of the social media channels, the U.K. regulator has committed to devise this clear guidance.
The full text of the document is available below.