The Financial Conduct Authority (FCA) has used its November 2018 Regulation Round-up to take the opportunity to remind motor finance firms of the rules regarding promotions made via social media.

The regulator has said that its Financial Promotions team has found that some motor finance firms are not complying with the relevant rules in CONC Chapter 3 when they post on social media platforms such as Facebook, Twitter and Instagram. The main issues are said to include:

  • Not displaying a representative example when this is required by the rules
  • Not making the representative APR prominent
  • Not mentioning the legal name of the firm – perhaps only mentioning a trading name
  • Not displaying the statement that they are a credit broker, and not a lender; or hiding this statement
  • Displaying monthly costs for a vehicle without indicating whether this is based on a credit or hire agreement

Firms have been urged to re-read the relevant sections of Chapter 3, and also to remind themselves of the social media guidance on the FCA website.

Although the item in the newsletter is specifically addressed to motor finance firms, firms in all sectors of the industry that use social media for marketing purposes need to be aware of the rules. Any form of communication (including through social media) is capable of being a financial promotion, depending on whether it includes an invitation or inducement to engage in financial activity.

The message from the FCA’s guidance is clear, in that the limitations of any particular form of social media cannot be used as an excuse for failing to follow the FCA’s financial promotions rules. Throughout the guidance, its rules are described as being ‘media neutral’, so Principle 7 about communications being ‘clear, fair and not misleading’ still apply, as do the detailed promotions rules in the COBS, MCOBS, ICOBS and CONC sourcebooks.

One of the main limitations of social media is that the size and length of messages are often limited. This means that social media may be inappropriate for conveying detailed or complex information. The FCA says that firms are permitted to add images into their social media posts in order to ensure that all required information is given but adds that any required risk warnings must appear in the body of the message and not in the image.

Adding a web link to a social media message may also not solve the problem. The FCA says that the message must be compliant with the promotions rules in its own right, regardless of the level of information provided on the signposted webpage.

The requirement for financial promotions to be clearly identifiable as such applies as much to social media as to other communication methods.

Firms are advised that the fact that a customer has chosen to follow a firm on social media or has indicated their approval of a communication – such as ‘liking’ a Facebook post or ‘favouriting’ a tweet – does not indicate explicit consent to receive unsolicited marketing communications.

Social media promotions are likely to meet the FCA’s definition of a non-real-time promotion rather than a real-time promotion, as the extent of the interaction between the firm and the recipients is limited.

Finally, the guidance mentions two important issues regarding forwarding of social media communications, such as via re-tweeting. Firstly, if a recipient forwards a communication, the firm remains responsible for the compliance of the original communication. Secondly, before forwarding any communication received from a customer, a firm must consider whether it would fall under the financial promotions rules and thus make them responsible for its content.

Firms are thus advised to think carefully before using social media promotions. Is the medium being considered appropriate for the message that needs to be conveyed?

The information shown in this article was correct at the time of publication. Articles are not routinely reviewed and as such are not updated. Please be aware the facts, circumstances or legal position may change after publication of the article