Financial Services and Social Media

After some investigation into the area of the use of social media by those companies governed by the FSA (Financial Services Authority), it is heartening to see that such a heavily regulated industry has some fairly light rules that its members are asked to observe.

Whether this refreshing lightness of touch is down to the firm belief amongst those in the FSA, that by its very nature social media is more volatile than traditional media channels and so needs less guidelines, or whether it’s down to a lack of understanding of the potential pitfalls and opportunities, I’m not sure. But I have my suspicions.

Nevertheless, it would appear that a two page pdf is enough to guide its members at this stage.

It is interesting however that the FSA guidlelines are entitled “Financial Promotions using New Media”.

Why first pick “Promotions”? Surely because the authors assume that this is another push channel for its members. In fact the opening section states, “We have produced this update following a review into the media channels that firms use to communicate financial promotions to customers. In particular, a shift towrds the use of ‘new media’ has been noted”

It sounds like the warnings that parents of teenagers heard in the fifties, when warned of the dangers of this new music called ‘rock ‘n’ roll’!

They do suggest guidelines for “Non-promotional communications”, which quite rightly state that communciations be “..fair, clear and not misleading”.

Finally there is a section called “What should you consider before using new media?”

  • New media may date more quickly than traditional • media channels, so regular reviews to ensure that information is up-to-date may be required.
  • It is important to consider whether this channel is a • suitable method for the type of communication. For example, Twitter limits the number of characters that can be used, which may be insufficient to provide balanced and sufficient information.
  • It is important to consider whether the risk • information could be displayed prominently and clearly using this media channel.
  • Promotions and communications made using new media must meet the requirements for
    stand-alone compliance.

So remember that Twitter can only handle 140 characters! “There will be no dancing in the aisles”!

It seems that as long as companies follow the current guidleines they’re covered. But the lack of detail is revealing.

What’s even more surprising is what’s not covered.

There is nothing here about blogs and Facebook pages that will solicit third party content. Nothing about staff training and supervision on using social media tools, nothing about SMS or chat rooms and nothing about the role of  agents of companies governed by the FSA.

By comparison FINRA, the US equivalent of the FSA, have published a lengthy report, also aimed at helping its members.

So, I’m beginning to feel as though the FSA is acting a  little like rabbits in the headlights and perhaps hoping this will all go away.

But guess what?

Interestingly FINRA has a blog, several Twitter accounts and a Facebook page.

The FSA doesn’t.

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