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The UK's New FCA Guidelines and What It Means for Advisors (Part 1)

This blog post is part 1 of a 2-part series. shutterstock_138153371
Back in mid-March, the FCA (Financial Conduct Authority) finalized its guidance on financial promotions over social media channels. The guidelines, which were the result of extensive engagement and consultation with stakeholders from across the financial services industry, have been designed to provide further clarity to financial advisers which have – until now – had little explicit direction on how to ensure their social media campaigns remain compliant.
The launch of these guidelines is timely. On a macro level, UK consumers are energetic and committed users of Facebook, LinkedIn, Twitter and Google+, with Ofcom estimating that, in 2014, 66 percent of online adults had at least one active social media account. With these users becoming more and more comfortable with brands marketing their services over these platforms – and with a growing population of digital natives who expect to be sold to in this manner – it is not difficult to understand why financial advisers want to leverage social channels. Indeed, many already are. Research undertaken by Intelliflo showed that, as of October 2014, some 58 percent of UK financial advisers were already using social media for business purposes.
But while there’s been a will to promote services over social channels, there hasn’t necessarily been a way; or at least there hasn’t been an officially endorsed one. While the Intelliflo research found that more than half of advisers have already engaged with prospects and customers over social channels, only a quarter of them stated their employers had introduced policies to govern and monitor these activities. This is a worrying mismatch, and suggests that some advisers are engaging with customers and prospects without the checks and balances in place to ensure that they are representing themselves and their firms appropriately across social networks.
The major concern here is that advisers can easily – either unwittingly or on purpose – fall into the trap of mis-selling, bringing their brands into disrepute. The new FCA guidelines will go a long way to clarifying what advisers can and can’t do over social. And while these rules come some time after we’ve seen social selling in practice, the regulator should be commended for recognizing that the complexity of social media marketing means it needs to be treated differently from traditional advertising and marketing campaigns. As the first European regulator to introduce specific rules to cover social media, the FCA could even be described as a trailblazer in its field, and we should expect to see similar moves across the rest of the continent over the coming months.
Check in next week for part 2: Best practices for advisers and what the FCA still needs to do.
This article was originally published on thewealthnet.
Disclaimer: The material available in this article is for informational purposes only and not for the purpose of providing legal advice. We make no guarantees on the accuracy of information provided herein.
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Yasmin Zarabi

Yasmin is responsible for Hearsay's legal affairs including commercial, compliance, regulatory and privacy matters. She is a thought leader in compliance for financial services, has been published in industry press and speaks at events around the world.

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