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The UK's New FCA Guidelines: What It Means for Advisors (Part 2)

shutterstock_137467250This is part 2 of a 2-part series. Read part 1 here.
Best practices for advisers on social media
By including what we consider to be the three vital elements of any best practice social campaign, the FCA guidance provides firms – and other European regulators – with a solid foundation on which to base their own social media policies:
1. Training: The guidance calls for investment in staff training so employees can understand the difference between appropriate and misleading content. This is especially important when employees use the same social media accounts for both business and personal purposes, where the lines between work and play can easily become blurred.
2. Supervision: The guidance covers the need for a robust approval process, ensuring that even the most diligent of adviser’s interactions are always checked and signed off.
3. Recordkeeping: Finally, it provides practical advice on how (and for how long) these campaigns should be archived, so firms can produce an accurate audit trail of how they’ve interacted with every customer.
Work is not done for the FCA
However, the rapid rate of change witnessed in the social media sector means that, to some extent, the FCA is always going to have to play catch-up with what’s happening in practice.  In comparison to equivalent guidelines in the US – which Financial Industry Regulatory Authority FINRA) introduced more than  five years ago, and where social selling in the financial sector is  ahead of the UK – the UK framework does have a few gaps.
The current FCA guidelines could be bolstered by adding more practical examples of both compliant and non-compliant activities.  Real life examples provide vital direction to busy advisers eager to implement campaigns without falling foul of the regulator.  While the framework does include a number of example tweets, posts and images to help advisers ensure their social content is always ‘clear, fair and not misleading,’ there are some omissions.  For example, it remains unclear whether an adviser could compliantly like or share a post from a financial institution without it being perceived as entanglement. Clarity of these points would clear up any lingering confusion and will likely be added to the guidance as the market matures and more use cases emerge.
Neither do the guidelines stipulate the penalties firms could face if their advisers breach these rules.  Nor is there any mention of how the FCA will audit firms to ensure ongoing compliance.  In contrast, FINRA more established guidance takes much more of a ‘carrot and stick’ approach to best practice.  As with the FCA, the carrot comes in the form of an actionable framework that is designed to empower financial advisers to confidently engage with customers over social channels. FINRA’s stick comes with its enforcement capabilities, comprising both auditing powers and penalties for non-compliance.
Final thoughts
It’s clear that the FCA’s framework is a hugely positive development for the industry. It’s increasingly impossible to ignore the potency of social media as a sales channel, and the regulator is making great strides to ensure firms understand exactly what they need to do to maximize this opportunity. Indeed, these guidelines should not be viewed as yet another tick box exercise to ensure compliance. Rather, the FCA has provided much needed tools to help advisers find and engage with a new generation of customers.
However, in my experience, firms are much more likely to continuously invest in the training, processes and systems that ensure best practice – and prevent mis-selling – if they know they could be audited and face penalties.  It will be interesting to see if the FCA toughens up its stance – transforming these guidelines into enforceable rules – as usage of social media by consumers continues to increase and social selling starts to gather real pace in the UK market.
This article was originally published on thewealthnet.
If you are interested in contributing to how social media should be regulated in the UK or in continental Europe, we are interested in hearing from you. Please contact us at
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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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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FCA proposes new social media rules


In new guidance consultation issued August 6 2014, the Financial Conduct Authority (FCA) aims to clarify the regulator’s approach to social media (prior guidance was published in 2013) and provide guidance for how firms should handle financial promotions through social media communications.

“Our overall approach is that financial promotions, whether on social media or traditional media, should be fair, clear and not misleading,” said Clive Adamson, Director of Supervision at the FCA said. “We have had extensive industry engagement on this issue and we believe our guidance is a sensible approach that doesn’t affect industry’s ability to innovate using new forms of media.”

“We recognise social media are constantly evolving,” said Adamson, “We, therefore, welcome feedback to today’s consultation and look forward to continuing the discussion with industry.”

Standalone compliance is also highlighted in the guidance. Each communication should be reviewed and comply on its own. For example, legal disclaimers should be given for each statement that is a financial promotion. These rules apply to all members of the financial firm that communicate “in the course of the business” and not just advisors or agents.

According to the proposed guidance, firms need to have adequate systems in place to review, approve and supervise financial promotions. In addition, firms should be keeping a record of communications on social media, and they cannot rely on digital media channels (the social networks) to maintain the records because they do not maintain complete records and are often subject to change. To assure compliance, firms can leverage third-party tools, such as a solution like Hearsay Social, to keep records of social media communications.

The guidance addresses challenges with the limited characters (140) available on Twitter, but indicates that the limited space provides no excuse for firms to not make it clear when something is a promotion. In fact, the FCA suggests one way that firms might indicate promotional content is by simply including the hashtag “#ad” in any promotional tweets. The guidance also suggests that firms consider image advertising, however, it advises that firms should not rely on just the image to indicate whether a tweet or message is promotional.
Firms can also address requirements by just tweeting a link to a website with a financial promotion clearly indicated. For example, “To see our current mortgage offers, go to”
Overall, it is good to see the regulator addressing the unique nature of social media communications, as it requires different regulatory requirements than more traditional online media. The proposed guidance, “GC14/6 Social media and customer communications: The FCA’s supervisory approach to financial promotions in social media” can be found here.
Comments on to the proposed guidance can be submitted before November 6, 2014 via email to
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.