fca attempts to regulate the internet

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.

Ahead of the curve, in June 2014, Panacea Adviser produced a free guide to Using Social Media Successfully, which also included direction from a compliance perspective and vitally, it was very easy to understand. A copy has been forwarded to the FCA. You can download a copy too.

The FCA paper could be summed up in the style of my end of term school reports that used to read “could try harder”“seems to have trouble grasping the subject” or “lacks perspective in key areas”.

I shudder to think what this venture into cyberspace has cost so far, let alone what it will cost.

We exchanged a few tweets with them on the matter, the thing with tweets is that they are there to allow some thought exchanges, ‘Tweeter etiquette’ dictates you should always respond as that helps with understandings.

Here is the only one they responded to:


: Being a follower of a firm on Twitter or liking a firm’s FB page doesn’t constitute ‘an established existing client relationship’ #smfca

11:35am, Aug 06 from Twitter Web Client


: @TheFCA net neutrality rules were also designed to allow the freedom to innovate without permission, a bit of a minefield you are creating?

11:55am, Aug 06 from Hootsuite


: @PanaceaAdviser we’re keen not to prevent innovation but need to make sure all financial promotions are compliant

3:23pm, Aug 06 from Twitter Web Client

Clive Adamson the FCA Director of Supervision (yes that Clive Adamson) said, “The FCA sees positive benefits from using social media but there has to be an element of compliance.

But what is an element of compliance? With a regulator there is no known measure or metric for ‘element’ until after the event.

Section 2 of their paper regarding the FCA supervisory approach starts with a definition of what are (not is) social media and has chosen a non-social media source as its reference point- the Oxford Dictionary 2013. “Social media share the characteristic of being digital and can be defined as ‘websites and applications that enable users to create and share content or participate in social networking”

Now if we were to use the more web relevant on-line source Wikipedia, the definition of Social media is “the social interaction among people in which they create, share or exchange information and ideas in virtual communitiesand networks”.

Wikipedia goes on to say that “Social media differs from traditional or industrial media in many ways, including quality, reach frequency, usability, immediacy, and permanence”.

The FCA produced a “non-exhaustive” list of social media classifications to include blogs, micro blogs (Twitter), social networks (Facebook, LinkedIn etc) forums and image or video sharing platforms like YouTube.

Wikipedia covers off the above too, but a little more richly noting that social network aggregation can integrate many of the platforms in use.

They go on to observe that “the boundaries between the different types have become increasingly blurred arguing that Twitter, as a combination of broadcasting service and social network, now classes as a “social broadcasting technology“.

The paper seems to ignore the various forms of social media and technology engagement habits of users. It makes no mention of business potential from managing and harvesting data from social media or ‘building social authority’ aka ‘vanity building’.

Clive Adamson went on to say, “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”.

Having been told by a number of influential financial services ’Tweeters’ (identified from our recent ‘Top Tweeter’ awards winners)  that they had not been consulted, Panacea Adviser has submitted an FCA FOI request as we would like to know more around who or what exactly “extensive industry engagement” represents. We have requested some clarification asking:

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

What is their level of Social Media knowledge, influence and expertise?

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

The FCA has a problem, as it seems to be trying to re-invent the wheel and Highway Code at the same time to control a vehicle that no longer has wheels, or is powered by petrol derivatives and that can, using technology, control and navigate itself quite responsibly indeed.

Some facts for the FCA to digest before they attempt to impose regulation where in many cases a simple application of common sense and a bit of caveat emptor would do the job just as well and at much lower cost.

Businesses building a significant following on social media are in fact creating their own publishing platforms, like us at Panacea, growing their channels of influence and content distribution networks.

They are creating a huge digital asset that grows every year in size and most importantly in value*.

Over time their investment in social media can provide huge opportunities for their clients and marketing independence if done right.

So with that in mind the FCA should have a look at some major social media metrics at the start of 2014.

Social media is simply a “blur of tweets, shares and content”. No longer is it just used by the young and those with little else to do. It is global and embedded in every corner of the web.

And above all, no matter how they may try, it cannot be regulated in the way the FCA would wish.

Some basic facts:

  1. 72% of all internet users are now active on social media
  2. 18-29 year olds have an 89% usage
  3. The 30-49 age group have 72% usage
  4. 60 percent of 50 to 60 year olds are active on social media
  5. In the 65 plus bracket, 43% are using social media
  6. Here are the top 3 countries for time spent on Facebook per hour online:

USA 16 minutes,

Australia 14 minutes

UK at 13 minutes.

  1. Some 71% of users access social media from a mobile device.

Twitter is the fastest growing social networking service seeing 44% growth in 2013, Google+ grew 33% in the same period, Facebook has 1.15bn monthly active users, Twitter 215m and the average time spent online with social media networks is 13 minutes per hour in the UK.

The Internet ethos was not and is not about control and regulation. It is global, operates, 24 hours a day and like the ‘Curates Egg’ is good in parts. It does not react well to phrases like “within our regime” or “standalone compliance”.

Isaac Newton said “I can calculate the motion of heavenly bodies, but not the madness of people”. The regulatory emphasis should be on the appropriateness of advice given, not a 140 character tweet that may have led to that process.

And the FCA wants to control this?

I would suggest they look at an easier and far lower cost opportunity, the banks?

*Information sources:





Simplified advice or simplified solutions

Kelly Johnson, lead engineer at the famous Lockheed Skunk Works, coined the acronym KISS.

Whilst today it translates as ‘Keep it simple stupid’, the principle was best illustrated by the story of Johnson handing a team of design engineers a handful of tools, with the challenge that the sophisticated jet aircraft they were designing must be repairable by an average mechanic in the field under combat conditions with only these tools.

Hence, the ‘stupid’ refers to the relationship between the way things break and the sophistication available to fix them when it happens.

As a country, UKplc has moved away from the manufacture of goods and products heading instead toward the manufacture and provision of intangible goods and services.

Financial services is often collectively referred to as an industry. Distribution was seldom linked to a profession, until the RDR arrived, and the industry is made up of many different “manufacturers” (providers) and distributers large and small.

Often very similar, intangible products have been designed to address a vast array of perceived financial needs or problem solving solutions for both personal and corporate consumption.

But in the brave new world of post apocalyptic RDR, the delivery of consumer friendly, understandable, simplified advice (to those consumers disenfranchised by adviser segmentation as being not cost effective to service) that could lead to a transactional outcome online is being thwarted by the very thing that should make it simple.


It is a fact that any ‘industry’ that “designs and manufactures” products have done so because it has identified a consumer need, or at least thinks it has. In doing so it then needs to create awareness of what it has made – and to find a way of getting it distributed. That still often means finding a sales force or in our more technologically enlightened times an easy way for somebody to buy it.


Indeed, obviously simple and there are so many ways to achieve the awareness and understanding with technology to enable the ‘shop’ button to be hit.

Video linked to free internet research opportunity and understandings can have a big impact in gaining better informed, engaged and protected consumers.

There are some 340,000 years of video watched globally online every day. 68% share their viewings and for firms that have video embedded on their site relating to a product or service, 88% of visitors spend more time on their site.

Consumers who watch a product video are 85% more likely to buy it. The phrase ‘what goes on in Vegas stays in Vegas, but what goes on in YouTube stays on Google forever’ is a great reminder that a compliance trail is nicely dealt with at the same time, no more ‘he said, she said’.

Simplified advice is possible, maybe a starting point would be inventing a different descriptive such as “Simplified Outcomes” or ‘Simplified Solutions’?

And to make this work, a set of plain English protocols should be put in place that simplifies the regulation and responsibility for “Simplified Outcomes” or ‘Simplified Solutions’, placing a consumer looking for low cost financial ‘understandings’ in an informed space, able quickly and easily to make a good decision and purchase while at the same time ensuring understanding they have an element of responsibility for their choices.

Steve Jobs said “We made the ‘buttons’ on the screen look so good you’ll want to lick them”.

As an industry, that should be our target, to get attention, to create confidence in the end user.

How can this be achieved though when the existing lines between advice, product and who is responsible are blurred when it suits?

Well, as a start, all manufacturers of financial services products should be required to have the product they “manufacture” certified or licensed as fit for “Simplified Outcomes” or ‘Simplified Solutions’ delivery in a clearly defined set of tick boxed financial planning circumstances and licenced accordingly- by the regulator.


The outcome of this would be that those not able to afford fees will know that “Simplified Outcomes” or ‘Simplified Solutions’ to satisfy their needs can be wrapped up in a recommended packaged product that has been deemed fit for that purpose by the regulator.

The word ‘advice’ must be removed from the process to make this work.

The regulator would carry responsibility for what it is regulating in the “Simplified Outcomes” or ‘Simplified Solutions’ space, creating the simplicity bit, unlike today. We would then see an end to the possibility of inappropriate or faulty products being sold or bought for the wrong reasons to the wrong people.

After all it seems crazy that in today’s regulatory world (where cars cannot get on the road, planes cannot fly, drugs cannot be consumed without a regulatory body certification that they are safe to drive, fly, inject) regulated products, funds and schemes are not licensed as fit for a particular, even specific purpose and instead often deemed unfit for purpose after the event because of perceived miss-selling, miss-understanding or miss-buying.

Can the FCA embrace KISS, well let’s see?