The FSA (the organisation which regulates financial services firms in the UK) have recently mentioned that they intend to have a greater focus on looking at communications from Financial Services companies (including financial planning firms) on social networking sites.

As the director of a financial planning firm and an active user of social media tools (both personally and within my business) you probably appreciate that I’d have an opinion on this….and I have!

Firstly I completely endorse the FSA’s crackdown on ‘unregulated distributors’ (companies not authorised by the FSA to give advice).  If you work within a professional financial services organisation it should be relatively easy to work out who’s information can be trusted (or not).

The issue is that many of the people who consume these social media messages could assume that the messages are all equally relevant and trustworthy.  Therefore the companies who are unregulated and provide information which is both technically inaccurate and potentially illegal should be removed and censured if they decide to continue.  For me, it’s as simple as that.

However the FSA needs to be careful.  There are many financial planning professionals who work hard to educate, inform and provide high quality data via social media, Blogs and other communication online.  If the FSA takes a ‘big stick’ approach to social media content it may put off financial professionals who want to help educate and inform but are too concerned about the potential censures imposed by the FSA to get involved.

One of the FSA’s statutory objectives is to ‘maintain confidence in the UK financial system’. Many of the financial professionals who use social media help the FSA achieve this objective through the work they do online.  It would therefore make sense for the FSA to encourage financial planning firms to use social media to support their goals.  After all a reasoned approach could potentially benefit consumers, professional financial services firms and the FSA.

As ever…this is just my opinion.  What do you think?  Should the FSA encourage social media use to help inform and educate the public?