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Guiding B2B marketers through FCA’s social media regulations

FCA social media regulations

No one can deny just how pervasive (or invasive) social media has become in our everyday life, and B2B is no exception. However, with great power comes greater responsibility, particularly when it comes to financial promotions. 

Recently, the Financial Conduct Authority (FCA) has taken steps to ensure that the rules surrounding financial promotions are upheld in the realm of social media. To shed light on these developments, I spoke with John Hartley, Head of Business Crime and Regulatory at Primas Law, and Rebecca Takada, CMO and Social Selling Specialist, Numentum to understand the implications of the new FCA guidance on B2B marketers engaging in financial promotions on social media platforms.

Understanding the guidance

John emphasizes that while there’s no new legislation per se, the FCA has worked alongside the Advertising Standards Agency and various social media platforms to adapt existing regulations to the unique landscape of social media. 

“Financial promotions have their own definition in other pieces of legislation. The idea for this guidance is that there can’t be any shortcuts, because social media is all about shortcuts. It’s all about being short, snappy, bright and colorful. ‘Look at this post, isn’t it amazing?’ Whereas financial promotions must have risk warnings and definitions. There has to be a lot of compliance behind the scenes.”

The focus is on interpreting existing legislation to ensure that financial promotions are compliant, transparent, and not misleading, even in the fast-paced world of social media marketing.

Challenges and compliance

As John pointed out, one of the primary challenges posed by social media is its format—brief and visually engaging. Financial promotions, on the other hand, require detailed risk warnings and compliance measures. B2B marketers must strike a balance between making their promotions attractive and ensuring they comply with regulatory standards. 

Creatives involved in designing graphic assets face new challenges. Compliance requirements mandate attention to detail regarding word counts and word-to-image ratios. John goes into further detail, recommending that each post, tweet or photograph must undergo scrutiny to ensure compliance:

“B2B marketers need to consider whether the pop-up banner, the font size or the risk warnings are appropriate for the particular message that is going out. For example, the risk warnings can’t be in a font or color which is included in the picture, or be slightly obscured by something else which may pop up to change it. Those are the sorts of things that the FCA wants marketers to be wary of.”

John adds that it’s important to take into account whether the promotion is given in real time, which means somebody is receiving a text message or a message direct to them to incentivize them to enter into a communication. This is often referred to as cold calling or unsolicited messages and in this instance, a slightly separate legislation applies.

Standalone compliance and platform suitability

Standalone compliance is key. B2B marketers must ensure that each post meets regulatory requirements, regardless of the platform. While the FCA doesn’t dictate which platforms can be used, marketers must consider the suitability of each platform for their message and target audience. Rebecca suggests a careful consideration in crafting messaging strategies: 

“While the new guidelines certainly narrow the regulatory perimeter of what’s compliant and give us less space to move around, it’s clear these guidelines weren’t necessarily created by marketing practitioners. So I’d say it’s up to marketers to work out for themselves how to adjust their promotion by different channel needs, which is annoying, but it’s nothing that we’re not used to.”

Best practices and compliance strategies

To ensure compliance, B2B marketers must align their strategies with regulatory requirements and avoid misleading promotions. John says all posts should adhere to the principles of clarity, fairness, and transparency: 

“The guidance is just that: guidance. It’s always going to be subjective but what they are stressing is that all relevant posts should fall in line with the other pieces of legislation out there. So all posts should be clear, fair and not misleading.” 

He adds that it’s important to seek approval from authorized persons, and ensuring that promotions are exempt from regulations where applicable.

“The laws around financial promotions have not changed. But there’s a core theme, there is a restriction on financial promotions. The guidance stresses that you need to look at whether or not the investment is firstly regulated, and if it is regulated, if it has been authorized and signed off. So that’s always the starting block for a strategy. Are we promoting something which falls inside or outside of the restriction?”

Collaboration and influencer marketing

The collaboration between the FCA and the Advertising Standards Agency aims to prevent illegal communications of financial promotions, particularly through influencer marketing. Rebecca says this adds complexity to the creative process:

Marketing agencies and the influencers themselves have to be quite careful. They have to be cautious taking on clients that provide financial products and services because according to the guidelines you really need to either be an expert in that world, so that you’re giving the right information, or you better have someone in legal who you can speak to in terms of risk and compliance.”

John recommends that B2B marketers must ensure that influencers and third parties promoting their products are compliant with regulatory standards to avoid legal repercussions.

“There’s a fine line between the promotion of a perfectly fine investment, but one that might not be compliant. So the underlying investment might be legitimate, but the way that it’s advertised might be non-compliant. The classic example would be a celebrity with lots of followers who is paid for promoting a particular investment. People may trust that celebrity without considering the necessary terms and conditions. And we now also have ‘finfluencers’ – those individuals who advise on financial investments, but themselves are not authorized or regulated by the FCA, but people trust them.” 

John points out that the influencer may be personally at risk and committing a criminal offense, potentially spending two years in prison if a financial promotion falls outside of the restriction:

“That person might be personally liable. Therefore any influencers should apply due diligence or make sure that the agent is checked, and that the financial promotion satisfies the boxes of the required regulation.”

Key considerations and advice

In conclusion, B2B marketers must prioritize compliance with regulatory standards when navigating financial promotions on social media. Seeking approval from authorized persons, ensuring clarity and transparency in communications, and conducting due diligence on third-party promoters are essential steps in maintaining compliance and protecting both businesses and consumers.

In essence, while the allure of social media marketing is undeniable, B2B marketers must tread carefully to ensure that their promotions meet regulatory standards, safeguarding both their brand reputation and the interests of clients.

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