In late 2014 the Financial Conduct Authority (FCA) released their initial consultation on guidance for social media use in regulated sectors, such as finance and automotive, and in doing so displayed the power of social media, by using Twitter and LinkedIn to share this paper with an audience of over 27,000. Earlier this week they responded to 67 pieces of feedback, and following input rom industry experts including CrowdControlHQ, not only recognised the need for compliant content, but also for a more holistic view of social media risk management.
As with all formal FCA guidance, the March 2015 social media regulations are designed to protect the consumer against being misled or making poor decisions, whilst also protecting businesses against loss or closure. The FCA has previously been recognised for raising the bar on social media risk management, and this opinion has been enhanced in point 1.26 of the March 2015 guidance, where it is formally recognised that firms must consider “provisions in our Senior Management Arrangements, Systems and Controls manual” to ensure content goes through required ‘two sets of eyes’ sign-off [1.24], and that “risk management encompasses all relevant risks, including legal and reputational risk, as well as regulatory risk”.
Another requirement originally found in the August 2014 consultation release, which has now been expanded in the March 2015 guidance, is the need for all firms to have full records of social media interactions which could be considered ‘in the course of business’ [1.25]. ‘In the course of business’ not only refers to content sent through corporate social channels, but also the personal accounts of anyone who could have interest in the business making financial gain. It has been recognised that there is little or no legal grounding in phrases such as ‘all these views are my own’ on user profiles, especially when individuals are known business leaders, and the same will apply under FCA regulations. Thorough record keeping is vital for both compliance and brand reputation management, as not only are firms reminded that they may be the need to “demonstrate compliance”, but also that records are important for protecting the consumer, when “queries and complaints from customers may require evidence”.
What has stayed the same?
We mentioned earlier that certain points within the guidelines have been changed or developed, however, there’s also a number which have remained, and are vitally important to compliant delivery:
- [1.4] A financial promotion is any communication, which “includes an invitation or inducement to engage in financial activity”.
- [1.7] All communications (including financial promotions) must be clear, fair and not misleading, as content that is unclear, unfair or misleading poses a risk to consumers and firms alike.
- [1.9] Signposting to financial promotions is acceptable, as long as the destination of a ‘click-through approach’ contains all relevant risk warnings, and the social media post itself is ‘standalone’ compliant. The FCA has provided clarity around it not being compliant to have a financial promotion within the social media content, and signpost to the risk warning.
- [1.13] Imagery can be used to ensure all relevant risk warnings are visible, however, firms must understand the nuances of specific social media platforms (i.e Twitter), where images being visible at all times can be switched off.
- [1.21] Social media interactions are not ‘real-time’, as they are directed at multiple recipients and do not require an immediacy; thus firms are required to follow conduct of business rules and create a record of the interaction.
What has changed?
Although much of the guidance has remained from the August 2014 release, the FCA has made some key updates to certain areas, which will provide unexpected challenges to regulated firms:
- Hashtag usage- Originally, in attempting to manage COBS 4.3.1R, which is a need for all promotions to be clearly identifiable as such, the FCA acknowledged the use of #Ad as a functional way of achieving this; especially on platforms where character count poses a challenge. Since reviewing feedback it has been decided that no use of hashtags is acceptable for promotion recognition.
- [1.18] ‘Retweet as endorsement’- Previously the FCA alluded to firms being responsible for anything that is retweeted, however, the March 2015 guidance emphasises that “if a customer’s tweet comments on or endorses the benefits of a regulated financial product or service, then sharing or forwarding by the firm will constitute a promotion by the firm”. Furthermore, the example used in the guidance relates to an individual who is directly linked to a brand, and therefore organisations must have total oversight of both corporate and employee social channels.
- [1.25] Record keeping- For the protection of both firm and customer, businesses are expected to keep full, clear records of social media interactions, which can be referred to by both the FCA for compliance purposes, and senior teams within the firm for customer complaints. Regulated companies are reminded that they cannot depend on native platforms (i.e Facebook, Twitter) to maintain these records.
- [1.26] Social media risk management- Firms are advised that adequate social media “risk management encompasses all relevant risks, including legal and reputational risk.
5 tips for social media compliance and risk management
- Central communications and compliance teams should have oversight of all social interactions across the business
- Ensure automated monitoring and prevention of phrases that could breach compliance regulations or damage brand reputation
- Install comprehensive content workflows between content creators and those in the business who have “appropriate competence and seniority”
- Compile thorough records of all social media interactions, across both corporate and figurehead employee channels, whilst cross referencing these for keywords
- Prioritise customer complaints based on their potential damage to brand reputation, and have managed workflows in place to deal with these effectively and efficiently.