Last week the FSA produced a paper on the use of social media by Financial Services companies. The paper was an analysis of 30 Facebook and Twitter accounts held by different organisations - both big and small - across the sector.
The FSA stated that when financial services firms do ‘make use of new media as a platform for advertising they must make sure that the information stays accurate and relevant’ and does not go beyond ‘image advertising’. It was also keen to point out that the guidance around promotion of product applied in new media in the same way they do to other mediums.
However, reading the contents of the report is a little worrying. The paper has the feeling of a holding position for the FSA, while they get closer to and start to understand the medium and how best to approach its regulation.
The focus on Twitter and Facebook is the first alarm bell. Considering the wealth of sites out there that can be considered social the task of assessment is going to be enormous. The second was the use of the word advertising. This suggests a misunderstanding of the social web as a conversational medium. The third and somewhat more worrying alarm bell was a statement that appeared on Outlaw.com. OUT-LAW asked the FSA 'if promotions on Twitter that provide a link to further details are likely to fall foul of its rules on stand-alone compliance. An FSA spokeswoman said 'the FSA would not be prescriptive on that point''.
There are similar vague responses to the specifics of how regulation would apply in the medium. Overall there is an overarching feeling that Providers and IFAs are going to be left to interpret the regulations themselves. In an industry that has such stringent compliance procedures this position could very effectively dampen the growth of use of the medium for all but the most confident of companies. In a context where no regulation has been specified firms could take the view that it's simply too risky to enter the arena, or moreover social presences will become stiff broadcast mediums entirely unsuited to the new conversational online world.
The FSA needs to quickly get up to speed on this issue and offer much more specific guidance. This doesn't need to be a huge tome, in fact I'd suggest anything but, but it does need to provide examples of good and bad practice.
Maybe radically it could convene a loose working group that could help shape its approach to regulation in the medium. I know Teamspirit would certainly be keen to get involved in that. So how about it FSA? I'm having to ask you here because I couldn't find you on Twitter.
Head of Digital