The UK's Financial Conduct Authority has aired its opinions about the rules that relate to financial promotions on 'social media' such as blogs, microblogs (Twitter), social and professional networks (Facebook, LinkedIn, Google+), fora, and image and video-sharing platforms (YouTube, Instagram, Vine, Pinterest).

The recently-released paper is entitled FG15/4: Social media and customer communications and the FCA refers to it as 'finalised guidance.' It contains the regulator's responses to a previous opinion-gathering exercise on the subject.

The click-through approach

Some of the responses suggested that tweets and posts should be viewed as an initial part of the promotion, not in isolation, i.e. as the “start of the customer journey.” They thought that 'standalone compliance' (every communication should be compliant in and of itself) should therefore be assessed on the combination of a tweet or post and the website to which it links, where further balance/risk information can be presented in its entirety. This suggestion is often referred to as a ‘click-through approach’, where the initial communication is only required to be fair, clear and not misleading – the website to which it links can then meet the further requirements.

The FCA rejected this flatly: “Such a ‘click-through’ approach raises the question of what constitutes a financial promotion. In our view, a tweet and a website will be separate financial promotions, as defined in s21 Financial Services and Markets Act 2000. On that basis, each must comply separately with any specific requirements in our rules, as well as being clear, fair and not misleading.”

In the course of business...

If an employee refers to a firm’s products on his own Twitter user’s profile page, does this amount to a financial promotion and is he subject to the same rules that would apply to the firm? Here, the FCA was ambivalent, saying that if it could be considered an inducement or invitation, it might constitute a financial promotion.

The hashtag

The FCA's 'conduct of business sourcebook', at COBS 4.3.1R, requires firms to ensure that financial promotions addressed to a client are clearly identifiable as such. In the past, the FCA has recommended the use of #ad, but it now recommends the opposite because 'paid-for advertising' on several social media platforms already tells the public that the content is promotional.

Banner promotions

The paper contains an example of a 'banner promotion'. A 'dynamic banner' is one that changes when the reader clicks on it and reveals other banners that continue its promotional message. Banners on websites seem to be on the wane, and banners are not strictly 'social media', although they can appear there and are therefore relevant to the paper. Nonetheless, the FCA includes a diagram of a compliant dynamic banner promotion, noting that the warning ('shares can go up or down', or whatever is relevant) can come at the bottom of the third banner the reader sees as he clicks from one to the other. If the print is too small and mixed up with other boring-looking text and is on the fourth banner rather than the third, however, the FCA thinks that the advertiser is trying to camouflage it and will complain.

The FCA points out that a financial promotion must also be made ‘in the course of business’ for its regime to apply to it. This probably rules out a publicly displayed message from someone in a life office to his mother on Twitter about the excellence of a product, but one never knows with the FCA. It says that it has published its own opinion about this in PERG, its 'perimeter guidance manual.'