Communicating compliantly in the digital age


On 17 October 2014, Redleaf hosted FCA's Richard Lawes to discuss how companies can use social media for financial promotions in compliance with the rules.


The starting point for Richard Lawes’ presentation was that communications from firms to clients, especially financial promotions, must be clear, fair and not misleading. Guidance issued by the Regulator in 2010, which is now in the process of being updated, does nothing to change that basic principle despite the growth of social media, especially Twitter.

Mr. Lawes said the FCA now has a new objective, which is to promote effective competition in the interest of consumers, running alongside consumer protection. Firms are required to compete effectively, with the interests of their customers and the integrity of the market at the heart of how they run their business. The FCA sees the increasing presence of financial services on the web as a significant opportunity for small firms trying to break into the market.

Non-promotional communication

Mr. Lawes gave an example of a non-promotional communication (left). But it would cross the line into becoming promotional if it went on to suggest its trading technology helped deliver better performance.

Retweeting a customer’s positive comment will not constitute a financial promotion, as long as it doesn’t suggest a particular product has the best returns. That would transform the retweet into an invitation or inducement, and therefore a financial promotion.

Promotions for investment products

The FCA expects Twitter to be the main social media channel, though Facebook will also be in the picture. So what are the dangers? Mr. Lawes said a tweet becomes non-compliant (right) if it lacks balance, over emphasises the benefit, does not have an adequate risk warning, and does not identify itself as a promotion.

Marketing compliantly within the tight limitations of a tweet is difficult, and one variant is use of an image, but not as in the example which is misleading in stating a gain of 754%. Investments can go down as well as up.

When using a hashtag (left) you have to be sure it is unambiguous. This example is fine because it contains a warning within the character limitation.

Mr. Lawes noted that journalists are exempted from regulatory constraints, and can write about funds without including a risk warning. However firms must take care when retweeting an article that it avoids being regarded as an invitation or inducement.

If a tweet directs the recipient to a landing page containing both the article and a disclaimer that would likely be sufficient. But there is nothing to stop a firm directing the recipient to the newspaper’s own website,

It is also possible to tweet, for example, recommendations on research in a compliant manner. One way of ensuring compliance is to insert an image and sign-posting wording (see below). However, if a non-compliant tweet is retweeted by other people, even though the firm has no control over this subsequent communication, it may still find itself non-compliant. If in doubt, label every communication with a risk warning.

Pictures within posts

If a post contains a picture, that plays a part in the overall impression. If the text is misleading, the picture cannot offset it, and vice versa. If the picture contains an invitation or inducement then it will be found non-compliant.

If the image is not visible, due to the receiving device’s functionality, the post must contain sign-posting to tell the recipient there is a link. However the language has to be precise and not constitute a promotional message, simply encouraging the recipient to open the image.

From what Mr. Lawes said, the FCA recognises that Twitter imposes severe space constraints, and the use of images and infographics will be useful for consumers, but as part of the promotions process and not as a way to circumvent it.


The issue of prominence has already been addressed in existing guidance on how firms should position products and services in their communications, including colouring, font size, and overall context.

Stand-alone compliance

Every financial promotion must comply with all relevant FCA rules. Firms cannot omit important risk information, for example, with the intent of including it later in the sales process; at each stage, the customer must be given fair and balanced information. All financial promotions must be stand-alone compliant.


It is important that, when using social media in the course of business, that a post communicates fully and effectively the message that the firm wants to convey. In the case of a listed company issuing materially important information via social media, it must be made clear in advance which channel will be used, so that the people who need to be aware of the information are aware of how to access it. If the message cannot be communicated effectively on social media, do not send it.

A record should be kept of all social media communications. Some social media channel providers may delete older material, so it is important for firms to keep their own records. It is vital that there is information on how social media is used, and who is using it, within a firm, should a challenge or query arise.

Don’t forget LinkedIn, which is becoming a popular platform for marketing. All the above information is relevant to this channel, especially that regarding risk warnings.

The guidance

The FCA Handbook contains both rules and guidance. Rules must be complied with, whereas guidance is exactly what it says. The guidance does not constitute the only way of achieving compliance, but is one way to do so. The rules are navigable and manageable and dependent upon the format of the medium through which the communication is being made.

EU directives have been a constraint on this guidance, and more flexibility was not permitted by EU law.


Redleaf Polhill view

Social media presents an exciting and dynamic medium for interacting with clients. However, the technological constraints of social media create challenges for companies looking to apply FCA rules and guidance. New technologies, such as Snapchat, may further challenge regulators and communicators.

With this in mind, navigating the challenging social media rules for communicators requires significant care and attention. For communications directors erring on the side of caution, the simplest means may well be to ensure that all communications are not considered financial promotions.

The FCA’s consultation on social media is ongoing. The deadline for making submissions is 6 November.