If you’re using Twitter as a marketing tool then be careful to factor in UK financial promotion rules, as Terry Huddart explains.
In August the regulator issued its guidance consultation on social media, aptly called 'The FCA’s supervisory approach to financial promotions in social media'.
In essence, the paper is a clear, arguably somewhat slow, reaction to the realisation that financial advisers are now communicating with clients, and are themselves being marketed to, via social media and – given the content of the paper – via Twitter in particular.
This is the digital revolution writ large in financial services. I wonder if our forbears in the 18th and 19th century knew that they were living through an industrial revolution? I doubt it; the reality was an industrial grindstone and poverty for most and it’s only through the prism of history that the true significance of the period could be understood.
We’re living in a digital age
This revolution is different. As well as better access to healthcare and longer life expectancy, another benefit we have today over our ancestors is better, in fact instant, access to what is going on in the world.
Intrinsic part of the marketing mix
Twitter is the worldwide pacesetter for immediate, word-of-mouth information on everything from sports news to tragic events. It was only in 2002 that Blackberry kicked off the mobile email innovation but Twitter is now accessed primarily through mobile devices (80 per cent according to a recent study by consumer research group Nielson) and this trend is only going to increase.
But as well as being a purely social media platform, Twitter is also now firmly embedded as a business tool. It’s an intrinsic part of the marketing mix for any organisation worth its salt and, depending on the size of the company, people are now employed with specific job titles like ‘social media manager’ and Twitter, for now anyway, takes up more of their focus than any other platform.
"Twitter is the worldwide pacesetter for immediate, word-of-mouth information on everything from sports news to tragic events."
I can appreciate that from an adviser perspective this might all be a mixed blessing. On one hand, it’s a new way to find leads. Clients can be sought and communicated with via social media and the informal nature of it provides a great environment for building client relationships. It’s also a science. There are a growing number of social media management tools for business, such as Tracx, Hootsuite and Sproutsocial.
However, when the adviser is the customer, Twitter can just be another method of being marketed to by providers – which isn’t always appreciated – and is intensified by the 24/7 nature of mobile connectivity. It can, of course, be a useful and fast method to get in touch to sort things out – and the public nature of it is useful to hold people to account.
New rules are inevitable
It’s not just Twitter that’s in the scope of the consultation; blogs, social networks, forums and image/video sharing media are all included. However, the big focus on Twitter is because it’s a microblog and 140 characters doesn’t leave much room for taking existing financial promotion rules into consideration. So whether it’s an adviser targeting clients, a provider targeting advisers, or a provider targeting consumers, the regulator has taken notice; new rules we are all going to have to get used to are just around the corner.
Focusing specifically on Twitter, here’s a short summary of where this is going:
- The general direction of travel is that it will have to be made clear within 140 characters that a tweet is a financial promotion i.e. if an inducement is made in the text
- To make it clear that a tweet is a financial promotion the hashtag #ad has been suggested as the method to identify the tweet as a financial promotion
- Where one is required, risk warnings would also have to be part of the 140 characters
- Character images can’t be inserted within the financial promotion warning instead, because functionality exists to block images
- The rules would apply only in the ‘course of business’ meaning in essence that conversations between groups of individuals are not covered, so we are looking at tweets from company Twitter accounts (albeit with a caveat that individuals can be a company).
So, big brother is coming to Twitter. The platform was definitely not designed to cater for something like UK financial promotion rules, but it’s going to have to.
In fairness, the content of the consultation is pretty common sense and any legislation from it doesn’t look like it’s going to be too difficult for both advisers and providers to adhere to – but we will all need to be careful.
What’s for sure is that, as the digital revolution continues apace, Twitter will ultimately be replaced by something else. So as we wait for the outcome of this latest consultation, we had better get used to more regulation being applied to all forms of digital communication in our industry.