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FCA deserves a pat on the back for its social media guidance

March 17, 2015

Regulators don’t often get praised. Let’s face it, they don’t often deserve praise. But the Financial Conduct Authority deserves a huge pat on the back for the revised guidance on social media it published at the end of last week. It is sensible, balanced and full of commonsense advice, not words most of us often use when describing regulatory advice.

FCA_logoWhen the FCA launched its consultation on social media for regulated firms last August I wasn’t hopeful. It was one of those cases of ‘I wouldn’t start from here’. So much of it seemed to miss the point of social media and its well-established role as a key communication channel between businesses and their customers. Clearly, there has been alot of very well-informed and intelligent response to that consultation and the FCA has listened very carefully.

It rightly notes that firms find it difficult when using character-limited forms of social media such as Twitter to comply with some FCA rules. This includes the key financial promotion rule, which says it must be made clear when a promotion is a promotion, as well as the need to include appropriate risk warnings. The consequence of this has been to stifle – often to the point of suffocation – well-meaning attempts by firms to use social media. The dead hand of compliance has killed many initiatives stone dead.

The new guidance should have a liberating effect and enable communications teams to make much greater use of social media free of the fear of incurring the wrath of compliance.

The FCA sensibly advises firms to consider whether it is appropriate to use character-limited media as a means of promoting complex features of financial products or services. To me this should never be a prime use of social media in financial services. It is a much more subtle and multi-faceted tool. To use it primarily as a product promotion vehicle misses the real potential which is to promote useful content and build customer engagement around that content.

The guidance has plenty to say about how to use social media as a means to stimulate engagement, essentially how to use it effectively within the regulations as a content marketing tool. It doesn’t quite put it like that but that is what lies at the heart of its guidance.

Of course, firms have to have the right content to engage customers and that will be a challenge for many firms but there are enough good examples around to show that it is far from an insurmountable challenge.

The guidance has plenty of illustrations of compliant and non-compliant use of social media to help people understand its approach. I advise everyone using social media in the financial services sector to read it. It is 20 pages of sound advice.

Of course, other challenges still remain. Creating the right content to support a social media campaign is essential. Finding where your audience is in the ever-changing social media universe is another ore-requisite for success. Alongside that it is important to have a thorough understanding of the platforms, the tools, how to measure engagement and create  cost-effective social media programmes.

Some of us can help with all of that including content creation and Social Media Training for Financial Services Firms – just get in touch.

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