Simoney Kyriakou explains the importance of keeping your social media within the regulator’s guidelines
The youth are at it again on TikTok: extolling populist investment trends and pushing cryptocurrency like it is a bucket of hot, crispy chicken.
But while financial advisers do, quite rightly, take informed and well-aimed shots at this sort of uninformed, dangerous content, the fact remains that social media has become a stomping ground for all manner of financial promotions, engagement and communication.
Within the regulated financial services space, social media plays an exceptionally important role, one that the City watchdog has acknowledged.
In 2015, in its 20-page final guidance note 15/4: Social media and customer communications, the Financial Conduct Authority (FCA) stated: “We recognise social media are powerful channels of communication and of significant value to firms.
We do not want to prevent their use. These media allow firms to contact their customers, and vice versa, both pre- and post-sale.”
According to Informed Choice’s Martin Bamford, founder of Bear Content: “Social media is an incredibly powerful tool for advisers, as a way to raise their profile, find information and useful resources, while communicating with both existing and prospective clients.”
Rules of engagement
But while it can be a fantastic way for advisers to showcase their expertise, there are rules about how regulated firms should engage with clients through Twitter, Facebook, Instagram, LinkedIn, blogs and the like.
This means advisers must pay strict attention to what they write, the language they use, the way in which they fashion and format their posts, as well as consider the intended audience.
Gill Davidson, chief risk officer for Quilter Financial Planning, comments: “Setting up your page and maintaining it properly to keep your customers and prospects updated compliantly can be time-consuming.
“But by raising your online profile, you open up new communication channels with customers, making it easier for prospects to find out about your services and position your business as being in touch with the way modern consumers operate.”
However, she warns against thoughtless posts, adding: “Quilter has seen first-hand the ease with which scammers use social media and the impact of such activity has been dramatic in lockdown. The last thing any firm wants is for a genuine post to be mistaken for a scam. The reputational impact alone could be catastrophic.”
This is one reason why, according to the regulator, it does not matter whether it is a long blog post or a 240-character Tweet: any social media communication from regulated financial services firms must meet its guidelines.
The product push
One big no-no is the product push; marketing goods or services without any compliance checking or necessary caveats.
The FCA’s FG15/4 states: “There is a specific requirement that financial promotions for investment products are identifiable as such.
“For social media in particular it is important that, in all cases, it is clear a promotion is a promotion. This can be by labelling the promotion as such, or it may be clear from the context.”
The FCA Handbook elaborates on what communications are compliant with the Financial Services and Markets Act 2000. It also aims to help people “decide whether their activities in making or helping others to make financial promotions are regulated activities”.
Social media, especially Twitter, is polarised. There’s no middle ground. So you’ll always end up with half of people ‘hating’ you if you get into those sorts of debates, which might not be good for your brand
Roger Edwards, founder of Roger Edwards Marketing, points out: “Sometimes people forget it’s ‘social’ media, not ‘selling’ media. For example, you might go into a pub and chat to friends about ‘that article you read in FTAdviser’. You wouldn’t, or shouldn’t, go into a pub and immediately start selling to people.
“So, the most successful advisers on social media share interesting and helpful stuff, and engage in conversations. If you start talking about products and investment performance, then it becomes a financial promotion.”
Suppose an adviser simply retweeted a TikTok video of someone promoting crypto, without addressing the dangers and risks associated with such investments. A retweet with no caveats could be seen by some potential and existing clients as an endorsement; is it then a promotion of an unregulated investment?
What would the regulators make of a consumer complaining they were misled to invest in high-risk investments on the basis of careless posts?
Ms Davidson stresses: “Ensure any posts or comments you make cannot be construed as financial advice.”
Some firms use podcasts to engage with existing clients and new prospects. These will include phrases such as: “This broadcast is a general discussion of personal finance matters and does not constitute a personal recommendation or financial advice.”
Providing clear caveats is a must.
Responding responsibly
It is not just one’s posts that are subject to scrutiny; it is also any likes, retweets and responses to other people’s posts that could evidence poor conduct.
The FCA’s Senior Managers & Certification Regime clarifies that the watchdog is paying close attention to non financial conduct to assess a regulated individual’s fitness to practice.
According to Ms Davidson, it is best not to put anything online that “you don’t want on the internet: remember that online never forgets”.
Mr Edwards says: “Social media, especially Twitter, is polarised. There’s no middle ground. So you’ll always end up with half of people ‘hating’ you if you get into those sorts of debates, which might not be good for your brand.”
Even deleting posts cannot hide the evidence: there are sites that can pull up all your deleted tweets and your likes.
Yet Mr Bamford says using social media is not necessarily riddled with pitfalls; it is just about being aware of the possible impact of a post.
He explains: “A simple rule to follow is to assume everything you share on social media could end up on the front page of every newspaper in the country.
“I shared a photo on Twitter that went viral and was published in every national newspaper, as well as shown on [TV]. Thankfully, it was an entirely innocent photograph and comment.”
Mr Edwards agrees it’s easy to get “paranoid” about the compliance issues of social media, adding: “Most of the time it is just common sense.”
Sensible steps
Being aware of the FCA’s rules means understanding how a post is an extension of your firm’s marketing and being mindful of your role as an ambassador of your firm.
Mr Bamford says: “Some firms are overly cautious about the regulatory implications of social media. Assuming you use social media primarily in a personal capacity, then say nothing to bring your employer into disrepute and avoid financial promotions (without prior approval).
“Our employees are ambassadors for our business at all times and their conduct on social media platforms, even in a personal capacity, should reflect that duty.”
The FCA has stated all firms should have a social media policy but companies must do more to ensure all staff and contractors know what that policy is.
Mr Bamford says: “It is a regulatory requirement, and good business practice, to have a social media policy in place for staff to read and understand, along with appropriate training.”
And when it comes to keeping in line with the FCA, Ms Davidson adds: “If in doubt, check it out.” It never hurts to get something edited by someone else before publication; trust me on that one.
Simoney Kyriakou is senior editor of FTAdviser
