Tracey McDermott, FCA Director of Supervision and Authorisations commented: “Social media is already an important tool for industry to engage with customers and its use is only likely to grow. Financial promotions, whether on social media or traditional media, must give customers the right information and meet our requirements to be fair, clear and not misleading. We have had extensive industry feedback during our consultation. We believe this guidance reflects a sensible approach that allows the industry to innovate using new forms of media and at the same time ensures customers get the right level of protection.”
The Guidance
Firms are reminded that any form of communication (including through social media) is capable of being a financial promotion if it includes an invitation or inducement to engage in financial activity. All communications (including financial promotions) must be fair, clear and not misleading. Promotions that fail to be ‘fair, clear and not misleading’ can pose a risk as they could lead consumers to buy the wrong product – ultimately with unhappy outcomes for them and for firms.
Communications through social media can reach a wide audience very rapidly, so firms should take account of that in their decision to promote through social media, and when deciding the nature of their promotions. Firms should ensure that their original communication would remain fair, clear and not misleading, even if it ends up in front of a non-intended recipient (through others retweeting on Twitter or sharing on Facebook). One way of managing this risk is the use of software that enables advertisers to target particular groups very precisely.
The requirement to be fair and not misleading require balance in how financial products and services are promoted, so that consumers have an appreciation not only of the potential benefits but also of any relevant risks. Firms should consider whether it is appropriate to use character-limited media as a means of promoting complex features of financial products or services. It may be possible to signpost a product or service with a link to more comprehensive information, provided that the promotion remains compliant in itself. Alternatively, it may be more appropriate to use ‘image advertising’ to promote a firm more generally.
Highlights from the conference included:
-Notorious hacker and cyber-security expert, Chema Alonso, providing a hacker’s perspective;
-A representative from the Ministry of the Interior, Government of Spain, discussing cyber-security challenges in Spain;
-José Rodriguez, Chief Inspector, Financial Fraud Section, National Police Corps of Spain, talking about fighting the globalisation of cybercrime;
-Ori Eisen, founder of 41st Parameter revealing how technology can be used to address major trends in cyber-security.
-Charles Butterworth, Managing Director, Experian, on Experian’s fraud and identity strategic roadmap;
-Daniel Zelenski, Managing Director, New Market Development, Experian, EMEA, on Experian’s National Fraud Prevention Scheme, and how businesses can work together to tackle fraud;
-Chris Thomas, Director of Fraud Sales, EMEA, Experian, who led an industry panel discussion on digital evolution and the impact of fraud on the business models across multiple business sectors.
Speaking at the Future of Fraud and Identity event in Spain, Charles Butterworth, Managing Director, Experian, EMEA, said: “It was a great opportunity to be able to bring together so many leading organisations in EMEA to discuss the pressing global issue of fraud, and to gain a real understanding of the fraud challenges facing all industry sectors. Today’s tough economic climate is driving a surge in first party fraud for many organisations, whilst identity theft, the sophistication of fraudsters and cybercrime are also on the increase. Experian offers a range of fraud and identity products and services and we work closely with clients to take a strategic approach to fraud risk management and develop a multi-layered strategy that is commensurate with risk and value throughout the business.”
For further information on the event please see The Future of Fraud and Identity, Spain event video and photos taken during the day.
This week Experian launched a fraud campaign in EMEA to raise awareness of how Experian works with businesses to develop a strategic response to fraud that enables them to define a strong fraud risk strategy; identify and prevent fraud; and review and improve existing fraud strategies to keep up with current and emerging threats.
