The UK regulatory authorities have been monitoring the use of social media for some time. In February 2010, the Financial Services Authority (FSA) reviewed approximately 30 Twitter and Facebook pages containing a wide range of financial promotions. The review found a mix of both good and poor practice, which resulted in the FSA issuing guidance in the form of an industry update in June 2010 (www.fsa.gov.uk/pages/doing/regulated/promo/pdf/new_media.pdf). The guidance essentially stated that the financial promotions rules apply whatever medium is used.

In July 2013, the FSA's successor, the FCA, stated that it had no current plans to issue any further guidance in this area. However, the position changed in August 2014 when it announced that it was issuing a guidance consultation on its approach to financial promotions in social media (www.fca.org.uk/news/guidance-consultations/gc14-06-social-media-and-customer-communications).

The guidance consultation was the product of 18 months of extensive consultation that the FCA had with industry, with many firms stating that they were having difficulties in complying with some of the FCA's rules, particularly with the financial promotion rules for character-limited forms of social media, such as Twitter.

Following on from the guidance consultation, FG15/4 contains a number of important messages from the FCA on the use of social media.

Type of communication. Any form of communication (including social media) can be capable of being a financial promotion, depending on whether it includes an invitation or inducement to engage in financial activity. The FCA states that this could include, for example, "advergames", where promotional messages are placed in entertainment applications.

A financial promotion must be made in the course of business in order to fall within the regulatory perimeter. The FCA has set out certain examples where this test may or may not be satisfied, including at the pre-formation stage of a company. The FCA also refers to the guidance in its perimeter guidance manual (http://fshandbook.info/FS/html/FCA/PERG).

Provision of information. A fundamental requirement for all financial promotions, whether on social media or traditional media, is that they must give customers the right information and meet the requirements to be fair, clear and not misleading. Firms should, in particular, ensure that their original communication remains fair, clear and not misleading, even if it ends up in front of a non-intended recipient through others retweeting on Twitter or sharing on Facebook. The requirements to be fair and not misleading imply balance in how financial products and services are promoted, so that consumers have an appreciation not only of the potential benefits but also of any relevant risks.

Firms should therefore consider carefully the appropriateness of character-limited media as a means of promoting complex features of financial products or services. It may be possible to signpost a product or service with a link to more comprehensive information, provided that the promotion remains compliant in itself. Alternatively, it may be more appropriate to use image advertising. The FCA has given examples and reminds firms of its September 2011 guidance on prominence (www.fca.org.uk/static/pubs/final/fg-fin-proms-prominence.pdf; www.practicallaw.com/4-509-4911).

Each tweet, Facebook insertion or page, or web page is a separate communication and needs to be considered individually and comply with the FCA's rules, as well as being fair, clear and not misleading.

Firms should have an adequate system in place to sign off digital media communications. The current sign-off and record-keeping provisions in the FCA Handbook apply to digital media in the same way as to print.

Warning statements. Firms are reminded that there are requirements to include risk warnings or other statements in promotions for certain products or services. These rules are media-neutral and so apply to social media as they would to any other medium. The FCA recognises that these requirements may pose particular problems for the use of character-limited social media and suggests that a possible solution might be to insert images, including the use of infographics. However, the image itself must be compliant.

The FCA summarises how image advertising interacts with the FCA Handbook conduct of business rules (COBS) for different sectors. For investments, image advertising is exempt from most of the detailed financial promotions rules and guidance in COBS 4, but it will still need to be fair, clear and not misleading.

Retweeting and forwarding. When a firm's communication is shared or forwarded (such as retweeted), responsibility for compliance with the FCA's rules lies with the person who retweets or forwards the communication. However, any breaches of the FCA's rules in the original communication are still the responsibility of the originating firm and not the retweeter.

If a firm retweets a customer's tweet, whether or not it is a financial promotion will depend on the content of the tweet. If the customer's tweet comments on or endorses the benefit of a regulated financial product or service, then sharing or forwarding by the firm will constitute a financial promotion by the firm.

Unsolicited communications. Social media are prime channels for making unsolicited promotions and firms are reminded of the FCA's rules on cold calls and other promotions that are not in writing (COBS 4.8), unsolicited real time financial promotions of qualifying credit, a home reversion plan or a regulated sale and rent back agreement (MCOB 3.7), and financial promotions relating to consumer credit activities not in writing (CONC 3.10).

Hashtags. In a significant change to its guidance consultation, the FCA has decided that hashtags are not an appropriate way to identify promotional content. The FCA notes that paid-for advertising on several social media platforms already signposts that the content is promotional and the additional use of "#ad" would not be required to identify the communication as promotional. In addition, hashtag functionality is considered to be inappropriate for the inclusion of risk warnings or statement of jurisdiction.

The FCA has stated that it will soon publish a discussion paper, which will explore how it and the industry can work together to deliver information to consumers about the products or services they have bought, or are thinking of buying, in smarter and more effective ways.

The FCA's finalised guidance is available at www.fca.org.uk/news/fg15-04-social- media-and-customer-communications.