In its finalised guidance out on 13 March the regulator said it “revised our stance” on the issue and now believes hashtags are “not an appropriate way” to identify promotional content.
Most promotions will be “self-evidently promotions”, the regulator said, and it expects signposting only when the information is coupled with other material that may confuse people about its aim.
The regulator asked firms to stick to the principle of making promotions ‘fair, clear and not misleading’ and to beware of the constraints of character limited media such as Twitter.
In its initial consultation out in August the FCA said promotions for investment products must be identifiable as such for example by adding #ad in online posts on character limited media such as Twitter.
#Inappropriate
The U-turn followed industry concerns #ad was an “inappropriate use of the hashtag functionality”.
The regulator suggested hashtags would also be inappropriate for the inclusion of risk warnings or to highlight other limitations, such as jurisdiction (#UKinvestors).
It said existing signposts on social media already flag up paid-for content, “therefore the additional use of ‘#ad’ would not be required to identify the communication as promotional.”
The FCA explained it is concerned consumers would get confused when clicking on the hashtag and being led to a separate page where all the communications that have used the hashtag are displayed.
This would be information outside of the firm’s control and would be irrelevant, but this may not be immediately obvious to the user, it said.
The FCA said: “We appreciate that most promotions on social media will be self-evidently promotions and we would expect some type of signposting only when the promotional nature is obscured or coupled with other material (e.g. a celebrity endorsement or journalistic content).
“We appreciate that there may be positives to their use, such as improved prominence by the hashtag appearing as a coloured hyperlink.
“However, we believe that the warning or information would be ultimately diminished by the running together of the words in undifferentiated text (e.g. #capitalatrisk) and by the link to another page with largely irrelevant material, with the result that the consumer does not effectively access the important information.
“We have therefore deleted the reference to #ad in the Finalised Guidance.”
The FCA reminded firms that every form of communication is capable of being a financial promotion if it invites people to buy a product.
It said firms should “consider the appropriateness” of character limited media as a means of promoting complex features of financial products or services.
All media have their constraints, it said, and it expects firms to work within the constraints of the medium chosen.
Stand-alone compliance: each individual communication needs to be compliant in its own right.
Risk warnings and other required statements: risk warnings and other statements need to be included in promotions for certain products/services across all media. A solution when using character-limited media is to insert images, or infographics. But the image must also be compliant.
Image advertising: the use of images to advertise a firm’s presence in the market is less likely to present difficulties with character limits, the FCA said.
Recipients sharing or forwarding communications: where a recipient shares or forwards a firm’s communication, responsibility lies with the communicator, so the firm would not be responsible, the FCA said. However the original communication must be compliant. “Sharing or forwarding by a third party does not ‘cure’ any original non-compliance,” the FCA warned.
Approval and record-keeping: the regulator asked firms to have a system in place to sign off digital media communications. “This sign-off should be by a person of appropriate competence and seniority within the organisation,” it said.
