New media channels include social networking websites (Twitter and Facebook), forums, blogs and iphone applications.
During 1–5 February 2010 the FSA conducted a review of approximately 30 Twitter and Facebook pages using different search terms within the financial sector. It looked at the pages containing a wide range of promotions, including those from small and larger firms that offered a wide range of products, such as financial advice and investments.
Commenting, the FSA said: “We visited a variety of forums to gain an insight into the posts and comments that are being made. We also examined any discussions on insurance, investments, investment advice and mortgages available on the forums – of which 20 were randomly selected for review.
“Throughout the review we identified good and poor practice among firms who had adopted the use of new media to communicate financial promotions. Some promotions lacked risk warnings. Other promotions, while not very specific about products or services, nevertheless went beyond the definition of ‘image advertising’. Firms may not have considered these factors to meet the definition of a financial promotion and therefore have not applied the relevant communication rules. When a communication goes beyond the definition of image advertising in any way, it will need to comply with all of the relevant financial promotions rules.
“The treatment of image advertising varies depending on which sourcebook applies.
• New media may date more quickly than traditional media channels, so regular reviews to ensure that information is up-to-date may be required.
• It is important to consider whether this channel is a suitable method for the type of communication. For example, Twitter limits the number of characters that can be used, which may be insuffcient to provide balanced and suffcient information to comply with the high-level ‘fair, clear and not misleading’ rule. Image advertising is defined in the Handbook glossary.
• For mortgage products, MCOB 3 contains a specifc exemption for ‘image advertising’ or ‘brand
• It is important to consider whether the risk information could be displayed prominently and clearly using this media channel.
“Promotions and communications made using new media must meet the requirements for stand-alone compliance, and firms cannot rely on exemptions. You must ensure that any financial promotion is compliant with all the relevant rules and you have the systems and controls in place to deliver this.”
Where the FSA rules apply, they generally apply in a way that is media-neutral, and they focus on the content of the financial promotion rather than the medium used to communicate it. Therefore, applying the rules to financial promotions made using new media is no different to financial promotions made using any other medium.
Its communication rules are contained in COBS 4, BCOBS 2, ICOBS 2 and MCOB 3.
You can find out more about financial promotion rules at: www.fsa.gov.uk/Pages/Doing/ Regulated/Promo/regime/index.shtml.
