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Watch Your Step! N
Social Media and the FCA James Leavesley, CrowdControlHQ
“Anticipated FCA Guidelines need to reflect the reality of social media that all organisations can learn from whatever the industry”
ew FCA guidelines regarding the use of social media by financial services companies are due for publication in the coming weeks. The finance industry is holding its breath as it waits to see what
is produced. It is generally agreed that more directives surrounding social media and the management of risk associated with digital media channels are required.
New media or digital media has been with us as a marketing and promotion tool for many years. However with the increased popularity of social media, including Facebook and Twitter the finance sector is being constrained by the need for compliance in terms of its use for promotional and customer relationship purposes.
The existing guideline for the use of digital media within financial services companies was produced in 2010 by what was then the FSA (Financial Services Authority). In April 2013 when the Financial Conduct Authority (FCA) and the Prudential Regulation Authority (PRA) took over from the FSA new guidelines were promised for the first quarter of this year. A new approach to this ever increasingly popular means of communication is very much overdue and urgently needed.
Regulation is Required – Mistakes Do Happen It is fair to say regulation and guidelines are required when it comes to social media in any industry. As
illustrated by an example from the US of how unprotected social media activity proved disastrous for one newly appointed Chief Financial Officer (CFO) at Francesca’s a clothing retailer with around 44 stores in different US states. After a confidential meeting the CFO used his personal Twitter account to Tweet, “Board Meeting, Good Numbers = Happy Board”. Francesca’s is a publicly traded company and the CFO was dismissed for sharing inside information. An easy mistake to make, but a dangerous one.
Employees need to be made aware that their personal social media channels could be linked to the organisation they work for and therefore can come under the same scrutiny. While many companies believe that policies and procedures are in place to prevent anything going wrong but is this really the case? From a corporate point of view surely the IT department must have something in place to prevent any misuse of corporate social media accounts. Think again. The danger is that within most organisations everyone thinks everyone else is responsible and therefore no one is really in control. What is the situation in your company?
To put it simply, social media poses real risks from both inside and outside an organisation and can have potentially devastating effects on the bottom line. Returning to the financial services industry, the original FCA guideline was very limited in its scope. It simply stated that promotions and communications
by financial services organisations using new media needed to meet the requirements for stand-alone compliance. This meant that every social media post by a financial services business could be construed as a digital financial promotion. Therefore every post has to comply with the FCA’s regulations on its own, which is not always easy given the restrictions and brevity of social media as a communication channel.
For a promotion to meet FCA compliance regulations it must outline potential benefits against possible risks and contain all the required information within the same place. It is not acceptable to simply provide another source for more detailed information. This is a tall order in anyone’s book when attempting to build relationships with new and existing customers via modern digital and social media methods.
Loss of Control over Social Media Assets Many organisations empower their employees or marketing agencies to create social media accounts on their behalf. But who owns these accounts and who has ultimate control? Multiple “entrepreneurs” within an organisation can set up accounts in the belief that they will benefit their employer as a “free” channel, to spread the word and add to the marketing mix. Accounts can be set up in minutes but who is responsible for keeping trace of these communication channels?
What happens when an employee leaves along with