Financial Conduct Authority Releases Guidance Consultation on Social Media Use
The UK’s Financial Conduct Authority (FCA) has published their much anticipated guidance consultation on usage of social media by the financial industry .Specifically in regards to promotion of services and offerings.
It is an attempt to manage the growth and use of social media as a communications tool for the financial industry – where major announcements and news are shared in a tweet or Facebook.
Regulating this communication is becoming an issue even in the United States, where regulators are challenged to balance the new way to communicate with transparency and practical investor protection. Think the movie Wall Street, if it had social media to boost those stocks and manipulate the market.
Crowdfunerinsider.com that featured the information wrote that the publication below is open for commentary in the UK til November 6, 2014.
The document features images that show suggested compliant and non-compliant use Twitter for financial firms.
Here in the States, the SEC earlier this year gave the go-ahead for third-party endorsements. According to Investment News, “Investors will be able to read testimonials about a prospective financial adviser online, much the way they now read restaurant reviews in deciding where to dine, according to guidelines issued last week by the Securities and Exchange Commission.”
The SEC Division of Investment Management published the guidelines (PDF), which industry experts said should encourage more advisers to use social media to promote their firms.
Publishing public comments from independent websites like YELP are permissible under the new guidelines.
The SEC guidelines covers Linkedin (no endorsements should be the rule), Twitter (avoid retweeting tweets from a securities research analyst) and Facebook (depends are what is liked.)
According to hearsaysocial, “Financial regulations only prohibit the use of testimonials or endorsements that are related to financial services and the ability to manage money.”
eMarketer.com recently wrote that “US marketing executives in the banking, finance and insurance industries said that while they currently spent 5.9% of their marketing budget on social media, they expected this share to grow to 7.4% over the next 12 months and 15.7% in the next five years.” The use of social media will not be used in the industry much more often.
Like anything else, commonsense should rule your use of social media. This is still a growing area of use with many pitfalls and uncertainly, but, slowly guidelines are making their way out. Where no guides have been set let transparency, honesty and good judgement always be your guide.
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