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:
- 72% of all internet users are now active on social media
- 18-29 year olds have an 89% usage
- The 30-49 age group have 72% usage
- 60 percent of 50 to 60 year olds are active on social media
- In the 65 plus bracket, 43% are using social media
- Here are the top 3 countries for time spent on Facebook per hour online:
USA 16 minutes,
Australia 14 minutes
UK at 13 minutes.
- 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?