8th October 2014

Financial Social Media UK: Series 1 – FCA Guidance Social Media

Guidance consultation: Retail investment advice - Clarifying the boundaries and exploring the barriers to market development 

Response to the FCA gc14-06 – Social media and customer communications by Bridget Greenwood, Financial Social Media UK – Part 1 

The FCA published its guidance consultation on social media and customer communications. It had been long awaited, and looking at guidance papers from regulators like the FFIEC in the US who published a paper in Dec 2013 that encompassed risk assessments, social media policies, procedures, best practice and more, there was quite a lot of anticipation for the clarity the regulator would bring.

The paper has been developed following engagement with other regulators both in the UK and overseas and other interested stakeholders, so I admit I was expecting more. 

The subtitle of the guidance paper reads “The FCA’s supervisory approach to financial promotions in social media” and that’s fundamentally what this guidance covers. As social media is primarily about engaging and building a community, and not another channel for companies to bombard with adverts and one way broadcasting, I rather feel they’ve missed a great opportunity here.

Perhaps because the FCA say that any conversations held outside ‘the course of business’ does not fall under their regulation, they’re choosing not to give more than regulatory guidance? Or perhaps it’s because they don’t feel as though they’re in the best position to talk about operational or brand risk? 

The eternal optimist, let’s take a look at the positives from this guidance consultation: 

It is the first European regulator to issue guidance specific to the medium, so well done for pioneering this. 

The FCA recognise that “digital media are now becoming the media of choice in many cases for customer communications… More particularly, firms are using, or wanting to use, social media forms of digital media (social media) for their communications with customers.” 

For those firms yet to recognise the significance of digital and social media (it’s 2014 people, come on) the regulator calling out it’s popularity and significance can only be a good thing. Social media is something to take seriously in your business. 

Importantly the FCA see social media as a great way of promoting effective competition and as a leveler for smaller firms to be able to compete along side larger enterprises. “…social media specifically may allow business to reach a wider audience – in a way which increases consumer awareness and knowledge; and, permit two-way communication as well…. We see significant potential benefits from the use of all digital media by firms…” 

So the regulator is actually keen for the financial world to use social media. 

“We recognise that social media are particularly powerful channels of communication and therefore of significant value to firms. We do not want to prevent their use.” 

Bridget Greenwood, Director of Financial Social Media UK http://financial-socialmedia.co.uk/

Business Development, Regulation, Social Media