FCA Issues Finalised Guidance for Social Media Financial Promotions

The U.K. Financial Conduct Authority (FCA) Financial Conduct Authority (FCA) The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol The Financial Conduct Authority (FCA) is the largest financial regulator for all financial markets in the United Kingdom (UK).The UK regulator is responsible for the conduct of firms authorized under the Financial Services and Markets Act 2000. Moreover, the FCA is also responsible for the regulation of behavior in retail and wholesale financial markets, supervision of the trading infrastructure that supports those markets, and the prudential regulation of firms not regulated by the PRA. Its rol Read this Term) published its finalised guidance about how brokers should be using social media for promoting their services in Compliance Compliance In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a In finance, banking, investing, and insurance compliance refers to following the rules or orders set down by the government regulatory authority, either as providing a service or processing a transaction. Compliance concerning finance would also be a state of being following established guidelines or specifications. This designation can also encompass efforts to ensure that organizations are abiding by both industry regulations and government legislation. Understanding ComplianceCompliance is a Read this Term 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.

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.

FCA Finalised Social Media Guidance