On Mar. 26, 2024, the Financial Conduct Authority (FCA) published its FG24/1: Finalised guidance on financial promotions on social media. This guidance clarifies expectations for social media compliance for financial institutions in the UK.
As stated by the FCA, “The Guidance advances our objectives of securing an appropriate degree of protection for consumers and ensuring that markets function well. By updating our expectations, we aim to promote better compliance by market participants who promote financial products and services. Consumers in turn should be better informed and aware of the risks involved in purchasing financial products and services, helping them to make better decisions that are aligned with their needs and risk profile. Informed consumers are less likely to experience unexpected loss and loss of trust in financial services. This supports sustainable economic growth in line with our secondary international competitiveness and growth objective.”
This comes as no surprise given the increasing popularity of social media marketing and the dynamic communication platforms that firms are embracing. Social media offers a multitude of benefits for firms. These platforms provide an unparalleled opportunity to connect with a wider audience and build brand recognition, foster a more interactive environment with customers, address their concerns, and build stronger relationships. Additionally, social media marketing allows for precise targeting, reaching your ideal customer base with relevant financial products and services.
However, with this immense potential comes a responsibility to ensure compliance with FCA regulations.
Let’s explore how your firm can successfully employ social media marketing (and their associated messaging capabilities) while keeping compliant in 2024.
What Do Financial Firms Need to Know About Social Media Compliance in 2024?
The FCA’s recent update to their guidance (FG24/1) clarifies expectations for social media compliance for financial institutions in the UK. Here’s a breakdown of key takeaways for financial firms in 2024:
- Focus on fairness, clarity, and consumer understanding
All financial promotions on social media, regardless of format, must be fair, clear, and not misleading. This means presenting a balanced view of both the benefits and risks associated with a product or service.
- Prioritize informed decision-making
Your social media content should equip consumers with the information they need to make well-informed financial decisions.
- Influencer marketing requires scrutiny
The FCA emphasizes the potential for consumer harm through misleading influencer promotions. Financial firms are responsible for ensuring any influencer they collaborate with adheres to FCA regulations. Unauthorised promotion of financial products by influencers can be a criminal offense.
- The platform matters
Consider the limitations of social media platforms when crafting financial promotions. Complex products might not be suited for a format with limited character space. Additionally, firms must abide by all policies as established by the individual platforms.
- Increased scrutiny and enforcement
The FCA is actively removing misleading financial adverts on social media. Last year alone, the FCA removed more than 10,000 misleading advents. Be prepared for heightened scrutiny of your social media marketing efforts, and know that non-compliance with the FCA’s guidance can lead to hefty penalties.
Understanding these points is crucial for navigating the ever-evolving social media landscape and ensuring your firm operates within FCA guidelines.
Strategies to Enhance Your Firm’s Social Media Compliance
The FCA’s recent guidance on social media compliance presents both opportunities and challenges for UK financial firms. By implementing these strategies, you can leverage social media’s power while mitigating compliance risks:
- Develop a comprehensive social media policy
This policy should clearly outline your firm’s requirements as set by the FCA’s expectations for social media compliance for financial promotions. It should detail content creation guidelines, approval workflows, and risk mitigation strategies for all social media activity.
- Educate your staff
Conduct regular training sessions to ensure all employees who engage with social media on behalf of your firm understand the FCA’s regulations and best practices for responsible financial promotion.
- Partner with influencers strategically
Before collaborating with influencers, verify they are FCA-authorised to promote the financial products or services in question. Establish clear guidelines for influencer content to ensure it adheres to FCA principles of fairness, clarity, and consumer protection.
- Content with disclaimers
Develop a library of social media content templates that pre-incorporate disclaimers and risk warnings. This can streamline content creation while ensuring compliance.
- Monitor and review consistently
Utilize social media monitoring tools to proactively identify and address potential compliance issues. Regularly review your social media activity to ensure all content aligns with the FCA’s guidance.
- Maintain transparency
Disclose all financial relationships with influencers or brand ambassadors clearly and transparently.
- Focus on value, not hype
Craft social media content that does more than push for sales but educates and empowers consumers. Provide valuable financial insights and focus on building trust with your audience.
By prioritizing these strategies, your financial firm can establish a compliant and successful social media presence that fosters brand awareness, audience engagement, and ultimately, sustainable growth.
Social Media Compliance with COMPLY
And COMPLY can help with that! COMPLY offers consulting solutions to help UK-based firms navigate social media compliance.
COMPLY’s UK Compliance Consulting Services package provides a holistic approach to FCA compliance, helping you and your team stay up-to-date with evolving requirements and changes.
Our team of industry experts have experience deciphering complex regulations, including the latest FCA social media guidelines. We bridge the gap between regulatory requirements and your business needs, ensuring your social media presence remains compliant while minimizing burdens on your internal processes.
COMPLY consultants go beyond just compliance. They’re trusted partners, helping you develop a strategic compliance framework that fosters transparency and builds trust with clients, regulators, and all stakeholders.
Ready to explore how COMPLY can enhance your firm’s compliance? Let’s talk!