8th September 2014

So who exactly have the FCA had “extensive industry engagement” with on Social Media use?

In the early part of August we read with some interest the FCA consultation paper on Social media, and commented at the time “The FCA has produced a consultation paper regarding its intent to impose rules on firms use of social media and customer communications. It is an interesting, and as usual dry, slightly confusing and condescending read”. 

In light of this we made this FOI request as all did not seem right in it’s sourcing of input or reference sources to write the paper:

Dear Sir/ Madam

You have just launched a consultation paper on social media use. It is called Social Media and Customer Communications

In paragraph one of the document it is stated that:

“Our overall approach is that financial promotions, whether on social media or traditional media, should be fair, clear and not misleading. We have had extensive industry engagement on this issue and we believe our guidance is a sensible approach that doesn’t affect industry’s ability to innovate using new forms of media”.

Can you please quantify what you mean by this statement by confirming:

Who exactly have the FCA had “extensive industry engagement” with?

What is their level of Social Media knowledge and expertise?

What is the FCA’s understanding of how an adviser would use Social Media based upon to produce this proposed guidance?

Were adviser firms engaged in Social Media activity consulted prior to the publication of this document and if so which firms?

Many thanks for your assistance with this request 

We have now received a reply that, given the nature of social media, we thought we would share with you as it raises many concerns for the industry, especially around what constitutes “extensive industry engagement” in the consultation process:

Further to your request for information relating to our recent Guidance Consultation on social media, I set out below your questions and our answers to them. Given the nature of the information you requested, I am dealing with this under our business as usual procedure, rather than under the Freedom of information Act.

Who exactly have the FCA had “extensive industry engagement” with?

Before consulting formally on this proposed social media guidance, the FCA undertook an informal information-gathering exercise and engaged with various stakeholders as part of our routine supervisory work. 

More specifically, we spoke at and participated in the following events: 

• Haymarket Social Media Conference, 14 May 2013
• Infoline ‘Social Media and Financial Services’, 26 September 2013
• Social Media Leadership Forum (Banking & Financial Services Group), 18 October 2013 and 9 July 2014
• Templars Social Media Roundtable, 7 November 2013

all the above allowed for questions and feedback; in some cases through panel sessions. They were aimed at financial services organisations and were attended by various regulated firms, as well as other industry participants, although we do not have our own record of those who attended.

In addition, we met at their request with the following industry organisations, specifically to discuss social media:

• the Wealth Management Association, on 26 February 2014, together with Templars/Social Media Charter;
• the Investment Management Association on 20 March 2014; and
• Brunswick Group, a business communications firm, on 18 July 2013.

Finally, we had meetings with the Direct Marketing Association on 14 January and 2 July 2014, to discuss digital advertising, but where social media specifically were also discussed.

What is their level of Social Media knowledge and expertise? 

We do not think it appropriate to comment on that point; no doubt you can form your own conclusions. 

What is the FCA’s understanding of how an adviser would use Social Media based upon to produce this proposed guidance?

We are aware that adviser firms may use/wish to use social media to communicate with their clients, including promoting their services, as does any other kind of firm: the proposed guidance is not aimed at any particular sector. 

Were adviser firms engaged in Social Media activity consulted prior to the publication of this document and if so which firms?

We did not consult any particular firms before publishing this consultation on our proposed guidance.  There may well have been adviser firms among the participants in the events listed above. The proposed guidance is now open for consultation among all regulated firms and other stakeholders. This consultation closes on 6 November this year, and we welcome comments from all interested parties.

I hope you find the above helpful.

Yours sincerely 

Richard Lawes

Financial Promotions / Specialist Supervision Department / Supervision Division

The words fair, clear and unambiguous could not be used for the FCA press communication surrounding the August press launch of the consultation paper on social media use.

The impression given by the regulator was that a significant amount of detailed research and industry engagement had taken place prior to it’s preparation –the above answers would suggest the exact opposite with very little deep and penetrative research of the subject or dialog with those most likely to be impacted by any resulting regulation!

There is a well known phrase in the English language to cover this type of thinking, it is something about ‘boots’ and ‘raining’,many may be familiar with it.

If only the regulator would meet the standards it sets for others in its rules! Instead it now puts out a document that the industry will have to go back to basics on because the regulator has not done the appropriate research and development in putting it together - this wastes so much time, money and energy.

In light of this FOI clarification, we have a new definition of the phrase ‘extensive industry engagement’ based on the FCA’s response to our questions!

In effect, it now means that attending a handful of conferences and not much else qualifies as ‘extensive industry engagement’. 

We have made comments to the FCA on the subject and sent them a copy of our free to download social media guide to assist in a better understanding.

It beggars belief that a regulator could formulate an entire consultation paper based on just this. And at what cost?

But what should really worry the entire industry is what other consultation papers have been formulated in this way….. the RDR perhaps?

Regulation, Panacea Comment