Financial institutional must advertise risk, FSA warns
(16 June 2010 – Global) Financial firms must put measures in place to ensure they are providing appropriate risk warnings when engaging new media such as social networking sites to promote products and services, the FSA warns.
The Financial Services Authority has noted an increase in banks using social networking sites such as Facebook and Twitter to promote products and services and has issued a warning to financial institutions saying that its rules focus in content not medium; highlighting that new media is governed by the same rules as old media methods.
The FSA conducted a review in February where it visited a number of forums and around thirty Facebook and Twitter account and witnessed both ‘good and poor’ practices, also noting that some advertisements lacked ‘appropriate risk warnings’.
Other promotions, while not very specific about products or services, nevertheless went beyond the definition of 'image advertising' prompting the FSA to speculate that firms ‘may not have considered these factors to meet the definition of a financial promotion and therefore have not applied the relevant communication rules’.
The FSA has said that firms need to regularly review their output and also question whether to consider whether the likes of Twitter, for example, is an appropriate avenue for advertising given its character limit.
The FSA conducted a review in February where it visited a number of forums and around thirty Facebook and Twitter account and witnessed both ‘good and poor’ practices, also noting that some advertisements lacked ‘appropriate risk warnings’.
Other promotions, while not very specific about products or services, nevertheless went beyond the definition of 'image advertising' prompting the FSA to speculate that firms ‘may not have considered these factors to meet the definition of a financial promotion and therefore have not applied the relevant communication rules’.
The FSA has said that firms need to regularly review their output and also question whether to consider whether the likes of Twitter, for example, is an appropriate avenue for advertising given its character limit.
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