Tweet nothings

20 February 2012 | By Samuel Dale

Last month two British students were banned from entering the US after the government took umbrage with comments they made on Twitter.

The offending tweets referred to “diggin’ Marilyn Monroe up” and claiming they were going to “destroy” America. The students used the phrases as slang but US government officials interpreted the tweets as threats to national security.

Surveillance of Twitter is not exclusive to the US government, with the UK police monitoring it during the summer riots last year. Police forces used the site to track movements of the rioters as they communicated about where to meet.

The instant reaction to events on Twitter means websites and newspapers can get comment directly from politicians and celebrities.

But politicians have been victims of errors or comments on Twitter that have rocked their careers or sometimes ended them. Just last month shadow health minister Dianne Abbott was widely criticised for her comments on Twitter accusing white people of using divide and rule tactics.

Twitter dominates modern communications so it is little wonder financial services firms want to grab a piece of the action

Shortly after, a typing error on Labour leader Ed Miliband’s Twitter page saw him pay tribute to the late Bob Holness but called his show Blackbusters rather than the family game show’s correct name of Blockbusters.

Both incidents caused a mass of negative headlines and highlighted the dangers of an instant service that limits the characters used to 140.

This is why many politicians and firms steer clear of Twitter. And last month Sky News banned its reporters from using Twitter in a personal capacity.

Twitter is certainly in the news and lawmakers and regulators are struggling to get to grips with how to monitor it. Superinjunctions are broken on the site without sanction while newspapers are gagged from reporting on them.

It became an absurdity when it became widely known through Twitter that Ryan Giggs was the footballer at the centre of a sex storm while traditional media could not report it.

The anonymity of the online world makes supervision a near- impossibility and judges and politicians struggle to design and implement coherent laws.

Financial services

Such problems pose challenges for the regulation of Twitter by the Financial Services Authority. It is fast becoming the medium of choice for financial firms, with a report by Corporate Insight last year showing it had surpassed Facebook as the most popular third party network. The study shows that only 15% of the firms it tracked had a Twitter profile in autumn 2008 but this had increased to 57% by October 2010.

“Our findings demonstrate that Twitter continues to gain in popularity,” the report states. “As of August 1 2011, 67% of the firms we track now have a presence on Twitter, a 10% increase in as many months. During the same time, the percentage of financial services firms with Facebook pages increased by 3% to 59% of the industry.”

Twitter dominates news agendas and modern communications so it is little wonder that financial firms want a piece of the action. Many brokers use Twitter regularly and find it a useful way to promote themselves and generate business.

The use of such a fast-paced, sprawling network carries all the same risks faced by politicians and the public but with the additional presence of the FSA.

Mortgage Strategy understands that a number of firms have been contacted by the regulator and told to amend or delete their tweets.

In 2010 the FSA conducted a review of the Facebook and Twitter pages of financial services firms. In its financial promotions update in June that year it claimed to have found some poor practice but did not expand except to say its regulations of financial promotions extended to social media. The regulator highlighted Twitter as a medium that firms must think carefully about before using.

“It is important to consider whether this channel is a suitable method for the type of communication,” it said in its financial promotions update. “For example, Twitter limits the number of characters that can be used, which may be insufficient to provide balanced and sufficient information. It is important to consider whether the risk information could be displayed prominently and clearly using this media channel.”

It reiterated that promotions and communications made using new media must meet the requirements for standalone compliance.

Rob Jupp, managing director of BrightStar Financial, was contacted by the FSA about a tweet by his firm.

“We are cautious when we comment on anything that could be construed as products and services as a result of the FSA contact,” he says. “It was courteous and contacted us in writing. We looked at the tweet in question and felt it had the appropriate caveats but as a result of its feedback we haven’t talked about any schemes since.”

Severe and inconsistent

Barrister and regulatory expert Adam Samuel says the restrictions on Twitter are severe. Samuel hosted a seminar on compliance on Twitter earlier this month and says the FSA must monitor the network like any other medium.

“The reality is that instant social media and complicated products are not a good fit,” he says. “Mortgage brokers shouldn’t use Twitter at all. If your firm is sponsoring the local fete, cricket or school sports day then tweet about that but anything related to products or service is not OK.

“If you get anywhere near promoting products, particularly rates, then you end up requiring risk warnings that most people can’t fit into 140 characters. Largely people get into a mess with Twitter.”

It is clear that if brokers stray into anything resembling financial promotion then they will be liable to sanction and censure by the regulator.

But what constitutes financial promotion on Twitter? For this article the FSA refused to approve or disapprove of some fake tweets as it could not give specific examples of wrongdoing.

However, a spokesman for the FSA detailed some of the main areas that firms must avoid when using financial promotions on any platform.

“Some of the key issues firms must avoid include misleading claims, key risks not made prominent enough, insufficient product information, unrealistic impressions of the product, or anything which might create an unrealistic expectation on the part of the consumer,” he says. “Essentially, we ask that promotions must be balanced, clear and not misleading.”

On its website the regulator gives some real examples of financial promotions that do not comply with regulations although social media is absent from the list.

Samuel agrees that the existing rules provide some guidance but believes the FSA’s approach can be inconsistent regarding the monitoring of social media sites.

“From time to time it takes an interest in them, which can be difficult as most people don’t see it coming,” he says. “Social media regulation is a rather disturbing area and firms seem to be hopeless at being compliant. The average broker or IFA is useless at using social media as most aren’t prepared to read the rule book.”

Samuel says there is little room for regulatory manoeuvre and it is tough to comply with the rules.

“The industry has to work with the regulator on this because unless there is an agreed protocol people will do silly things and get into trouble,” he says.

Jupp says the grey area surrounding social media is deterring brokers from using it to boost business.

“There needs to be further clarity on what brokers can do on Twitter,” he says. “Until there is, people won’t use it as a way to generate additional revenue.”

Samuel also believes there are areas of supervision where the FSA is being unduly harsh in its censure.

“One area where the FSA is being harsh, and it’s the only area I disagree with it, is over the promotion of awards,” he says. “If you’re a broker it is probably OK to tweet, say, who is the adviser of the year. But if you are selling investments of any kind then I would be twitchy about it.”

MMR clarity

The latest Mortgage Market Review paper referenced social media to remind brokers that its regulations apply equally to Twitter as anywhere else.

The regulator claims to be technology neutral so that any new advances can be incorporated into the regime without the need for more rule changes.

“When first designing the current mortgage regime, our aim was to be technologically neutral and, so far as practically possible, that remains our aim,” the MMR states. “The increasing use of technology is an important development we have kept in mind when developing our proposals.”

One of the key proposals in the paper is a ban on all non-advised mortgage sales where there is interaction with borrowers. There are narrow exceptions for high net worth individuals and business loans but essentially every borrower will need advice.

Such interaction will affect social media and the internet because anyone who tries to sell a mortgage will need advice. For instance, comparison sites may fall under the rule of the new regime as filtering mortgages could be deemed as interaction.

Kate Robinson, consultant at financial consultancy Bovill, says it is difficult to say how the rules will be applied but comparison sites will need to think about it.

“If there is a removal of a non-advised process by filtering results then comparison sites will need to think how they will fit into the new world,” she says. “Will their existing processes fit in with the new regime? They will need to ask themselves these kind of questions.”

This type of filtering process could be applied to Twitter too if a broker picked out one deal above others. But with the scope so wide the question is, how can brokers be both interesting and compliant when using Twitter?

Top Tweeters

Political journalist Harry Cole’s dictum for using Twitter is to never tweet anything that you wouldn’t happily say out loud on a bus.

When housing minister Grant Shapps recently revealed his rules for Twitter they were shared by Conservative whips as advice to all Tory MPs. Writing on political site PoliticsHome.com, Shapps’ rules include never tweet in anger, be engaging and keep it real.

Regulation means the test for financial services firms is higher. The FSA believes it is not responsible for how brokers use Twitter but only to apply its rules across all platforms.

Andrew Montlake, director at Coreco Group, is a regular tweeter who has never had any contact from the FSA about it.

“The mantra I’ve followed is that if you are putting in a call to action for your business such as rates changing or a new product available, then that is advertising,” he says.

“For me it crosses a line on what you should do on Twitter. Where you are just providing information then potentially that is OK, although it is a grey area. I know it is something the FSA is looking at more closely. If you are linking to something it will need to have all the necessary warnings. It is the language of the tweet that I think is important, although the FSA could have other ideas.”

Stuart Gregory, broker at Lentune Mortgage Consultancy, says he avoids discussing specific deals. “It is important to give people an overview of what that deal is all about so I retweet articles written elsewhere that can give more detail on the subject,” he says.

“Most mortgage brokers come to the same conclusion and steer clear of anything that could be construed as advice. It leaves you wide open to interpretation over whether it is advice or just information.”

Gregory says if brokers highlight one particular deal over another it could constitute advice.

“Twitter is useful because it can generally inform rather than going into specifics,” he says. “We can make potential clients aware of different scenarios.”

The reasoning behind all advised sales is that consumers believe they have received advice when they go into a bank branch.
Using this rationale it is easy to see why the FSA could have a problem with brokers’ tweets being interpreted as advice rather than merely information.

“In our view, a consumer is just as likely to believe that they have been advised if the communication between the consumer and adviser is instant communication through some technological means,” the MMR says.

Jupp, who runs an unregulated packaging firm, says he comments on daily office life and tries to make it fun and interesting.

“We don’t talk about specific schemes we offer,” he says. “I think it is a bit of overkill because if a member of the public contacted us about something we had written on Twitter I would direct them to an intermediary.

“We avoid talking about rates. We might say that we are working on an exciting development for self-employed clients and hope that generates interest from brokers.”

Linking up

Another area to consider is the different uses of Twitter such as including links to an article or disclaimer or retweeting comments.

Many brokers link to articles on the Mortgage Strategy website or retweet comments from others. In the MMR the FSA suggests that links may be insufficient to highlight required warnings for products.

“It would not be sufficient on a website sale, for example, for the messages to be accessible only by clicking on an optional link to another page,” it states.

Last September the FSA released further guidance on financial promotions generally highlighting prominence as the key, although it accepts it is subjective.

“Prominence can be defined as ’the state of being easily seen’, i.e. in terms of a statement within a financial promotion, ’likely to attract attention, for instance, by virtue of its size or position’,” it says.

The regulator discusses links from websites and says banner advertisements where risk warnings can easily be overlooked is poor practice.

Small type, hidden risk warnings low down on a web page and warnings that are easily overlooked are further examples of poor practice.

Examples of good practice include risk warnings displayed in clear and bold type on a neutral background and which repeatedly appear on every web page visited.

It makes linking from Twitter and retweeting news articles a grey area with only these points of general guidance as reference with no specific social media examples.

Is it worth it?

With all the problems facing mortgage brokers to tweet compliantly many may ask whether it is worth the risk.

Samuel says most big financial firms have banned tweeting because of the difficulties involved.

Some lenders have social media gurus dedicated to managing their accounts, with Nationwide recently reorganising to dedicate staff purely to social media.

“The difficulty is how are you going to tweet consistently and say something interesting, otherwise who is going to follow you?” says Samuel. “It is difficult to pull off coherently. The key rule is don’t advertise without a reason to do it. A great deal of financial promotions are, frankly, rubbish.

“I am advising clients not just to be compliant but also that they should hire a decent advertising agency because there is no clear strategy. The random use of new media without a clear objective is really dangerous.”

Gregory reckons that with so much red tape around financial promotions it can be tough for brokers to market themselves.

“It is so difficult for financial services firms to promote mortgages now,” he says. “We can’t use cold calling and many other things require lots of compliance before you step out of the office door. So there has to be a way to inform the public without going into details.”

Many of the regulations are construed as sensible and provide comfort to consumers that they are not being misled when buying complex financial products.

There is some truth that such complexity is not suited to a medium such as Twitter, with 140 characters incapable of providing sufficient caveats.

But Twitter is incredibly popular and to exclude financial services from such a medium seems unfair. Many in the industry believe that rather than trying simply to apply its existing rules on financial promotions, the FSA should work with the industry to find a way to safely use social media such as Twitter.

It should recognise that it is a dynamic and interactive medium that is unlike existing static promotions and advertisements.

As financial services firms push ahead with new technologies and the FSA rushes to keep the rulebook up to speed, it can create confusion. Despite this some brokers have found a way to use Twitter successfully, informing the public about the market and building their brands.

So although Twitter is worth using to promote your business it must be done carefully under the watchful eye of the FSA.

 

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