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FCA issues guidance on social media – are you compliant?

Twitter, Facebook, LinkedIn and others provide a cost-effective way to reach millions of potential customers – and that is as true for the motor industry as it is for all others. Social media is a powerful tool for reaching a large audience, but how do we keep that audience safe from misleading or unfair messaging?

Advertising has long been strictly regulated. So now the Financial Conduct Authority (FCA) has issued social media guidance for all businesses selling financial products or promotions, including dealerships. Its aim is not to prevent the use of social media but to ensure the customer receives fair and clear messaging.

To learn more about changing FCA regulations around the selling of financial products, download our FREE eBook: How the FCA changes will affect you.

What is a financial promotion?

Are you offering car warranties or other financial aftercare products to your customers? How do you promote those products? Social media is a great way to raise awareness and knowledge and entice customers to enquire about the benefits.

However, you must be aware that all communication is capable of being a financial promotion, including through social media, if it includes an invitation or inducement to engage in financial activity. You must ensure, therefore, that you are compliant with FCA guidance. This extends to individuals representing the company on social channels too.

It is important that it is clear in all cases that a promotion is a promotion – whether it is labelled as such or is obvious from the context.

Clear, fair and not misleading

It is a fundamental requirement of all communications to be clear, fair and not misleading. But how does this translate?

• Be clear – Ensure the recipient of your message knows exactly what you are promoting from the outset. Leading customers to buy the wrong product – through omission of key information, for example – will ultimately lead to complaints and a loss of trust in your company.
• Be fair – Tell customers about the potential benefits but also any relevant risks. This is not always possible in character limited social media so provide links to more comprehensive and compliant information. Honesty is a good way to build customer loyalty.
• Do not mislead – This means not selling products that particular customers cannot benefit from. Blanket promotions stating “everyone should extend their car warranty and save thousands”, for example, is misleading for those who would not be able to claim due to their circumstances. Target promotions where possible.

You can download the FCA’s social media guidance document from their website.

Communicating with your customers

There is a lot more to communicating with customers than social media, of course. Developing and maintaining that relationship will benefit you and them, in terms of customer satisfaction, loyalty and on going sales.

You can read our Top 5 Tips for Great Communications on our blog.