Financial Conduct Authority (FCA) chairman, Martin Wheatley, made clear the regulator’s intentions to make better use of Twitter in an interview with the Daily Mail in the days leading up to the transfer of power from the Financial Services Authority. He said the new regulator would be much more sensitive to information about financial products and the way they are sold.
“As part of our new plan to check on firms, we will look at how they make their money and scrutinise where their margins are. What’s new is that we won’t just be relying on regulatory reports back from firms, but on reports from consumer bodies, internet monitoring, the media and even on Twitter.
“In the past, the emphasis was on firms’ regulatory reporting – we will be much broader in our approach,” Wheatley explained.
Cause for concern?
But what will this mean for users of the platform? Should they be worried, or does this announcement mark the beginning of a more positive two-way relationship between the regulator and the financial services community?
Either way, the regulator is not starting from scratch with social media. Under a Twitter username of @TheFCA, it currently has 6,500 followers. Similarly it has worked with website Moneysavingexpert and Which? to develop its online presence and gain feedback from consumers.
It has deployed people on teams throughout the organisation to monitor and engage with Twitter users. Finally, it recently procured Radian6 software from cloud technology provider Salesforce – a technology designed to mine data from individual mentions on social media platforms as well as spot more general trends.
Phil Calvert, founder of social media site LifeTalk, said he was surprised the regulator had not made a commitment to Twitter sooner and that it had been only “been tinkering around the edges” to date.
But he explained that focusing on social media might not unearth the mis-selling that the regulator is interested in because advisers do not use Twitter to sell their products: “The biggest issue for the regulator will be the use of financial promotions, but anything like this would stand out a mile off. Twitter is a forum in which followers buy into a person’s ‘character’. A Twitter user might follow someone because they are amusing or informative and strike up a business relationship somewhere further down the line.
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“They might refer friends to this person because they trust them, but it just isn’t a forum in which people ‘sell’. I don’t think I’ve ever seen a financial promotion.”
Consequently, Calvert does not think the regulator’s commitment should worry advisers.
“I don’t think advisers should be concerned about the regulator making more use of Twitter. Most of them use it as a networking tool and this will not breach any codes. They use it because being a financial adviser is actually quite a solitary activity and it is good for them to feel like part of a community.”
Back up
However, Gareth Thompson, founder of CodePotato, a technology company that provides software to the financial services sector, thinks the FCA’s announcement should not be taken lightly, and that advisers should act to protect themselves.
“In my view, every adviser should back up their tweets just in case the regulator takes one of them out of context. Advisers should be able to show that a single tweet was part of a conversation and provide a broader understanding of its meaning.”
Thompson said that he uses a product called Tweet Nest to back up his own tweets. Tweet Nest is free, programmed in PHP and requires a MySQL database to work. Thompson explained that it is something a web developer could set up for an adviser within ten minutes or so.
He explained that Twitter is particularly searchable for the regulator because, unlike other social media tools, users have to opt out to hide their tweets from public view. “It can give the casual viewer a great deal of insight into a person or a business,” he said.
“I love Twitter and think it’s a great tool but the problem with the regulator getting too involved is that it might prevent advisory companies from making use of the technology and, ultimately, this could damage their brand. Consumers are starting to expect companies to use Twitter or Facebook and a social media presence creates a warm feeling around a company,” he added.
But what exactly the regulator will do on Twitter as it steps up its monitoring activities is yet to be seen. Calvert said: “It will be interesting to see how the regulator starts to interact with social media users. Will it take a hard line or a more interactive approach? Will it begin to follow advisers and, if so, which advisers will it choose?”
