(Adds consultant comment)
By Huw Jones
LONDON Aug 6 Companies are failing to include
risk warnings in financial promotions sent to millions of
customers on social media like Twitter, Britain's markets
watchdog said as it proposed rules to clamp down on this
The Financial Conduct Authority (FCA) on Wednesday launched
a public consultation on its approach to supervising financial
promotions on social media, which it said was in response to
calls for guidance from the industry.
The FCA said some companies argued it was difficult to weave
warnings into adverts sent by text, tweets, posted on Facebook
pages or in online forums because of space limits. A tweet, for
example, is limited to 140 characters and a text to no more than
But the watchdog said this was no excuse, citing examples of
how warnings have been successfully included.
Consumers must be presented with certain minimum
information, in a fair and balanced way, regardless of how an
advert is sent, the FCA said in its consultation paper.
"..they must all comply with investor protection rules to
make it clear the message is an advert."
"One generally accepted way to do this, for
character-limited media, is the use of #ad," the FCA said.
It could also be possible to include a link to more
comprehensive information, provided that the promotion remains
compliant in itself, the FCA added.
Gillian Roche-Saunders, head of venture finance at
consultancy Bovill, said the proposals lacked detail on how to
fully comply and would lead to uncertainty and inconsistency in
the way firms promote financial products.
Introducing the new #ad hashtag was innovative but having
just 40 characters to offer a potential investment opportunity
once the risk warning was added was going to be challenging,
The FCA highlighted good practice with a tweet promoting a
spread-betting service with a warning that a consumer's capital
is at risk and losses can exceed deposits.
In an example of bad practice, a tweet boasted that 500
people copied a trade done by a firm which made a 754 percent
gain in a year, and urged people to follow him.
Since June 2011, the watchdog has asked six mortgage-related
posts on social media to be changed or withdrawn, with a further
nine related to investments, and 19 to consumer credit.
The consultation ends in November and final rules could be
in place next year.
(Reporting by Huw Jones; Editing by Erica Billingham)