Advice issued by the FSA on the use of the social web by regulated businesses is misguided, ill-judged and ambiguous – it risks deterring businesses, like independent financial advice practices, from adopting the medium to improve client engagement and reduce costs.
The FSA guidance suggests ‘applying the rules to financial promotions made using new media is no different to financial promotions made using any other medium’. If that were the case, then the FSA wouldn’t feel compelled to issue guidance.
There’s a misunderstanding about the way this medium works. There is a big distinction between use of the social web to generate promotions for your business and using social web tools as a means of engaging with existing or new clients.
The concern is that the FSA’s implication that a tweet or Facebook status message may constitute a financial promotion will simply galvanise anxiety in the advice community, in particular, to use tools like Facebook as a means of maintaining contact with clients.
With 40% of the UK’s adult population likely to have a Facebook account, it is this medium – rather than more traditional media – that has huge potential to help consumers engage in their financial wellbeing.
The idea that tweets and status messages could require disclosure of risk information is misguided. The FSA is seeking to apply regulatory principles, designed with one communications model in mind, to an entirely different model.
Traditional media exists for companies to push promotions, while users – including regulated businesses – are adopting social tools in order to participate and share; there is a subtle but significant distinction.
Earlier this year, MRM wrote to AIFA suggesting the need for a debate about the application if social web tools for advisers. In an e-mail to Director General, Chris Cummings, we suggested that the FSA could deter access to a potentially significant and low-cost means of client communication.
This latest ‘guidance’ is a worrying development.