The Unsociable FSA's Dr Pepper Moment

THE UNSOCIABLE FSA’S MOMENT

THE UNSOCIABLE FSA’S MOMENT or ‘What’s the worst that can happen when a regulated business gets social?

Ian Thomas Brand consultant www.newtradition.co.uk

In June 2010, the UK’s Financial Services Authority (FSA) issued guidance intended for regulated financial services businesses in the UK

In June 2010, the UK’s Financial Services Authority (FSA) issued guidance intended for regulated financial services businesses in the UK Here’s what the guidance suggests…

Prevailing financial promotions regulation applies to platforms like Twitter and Facebook, and forums, blogs and iPhone applications.

It also said stuff that’s difficult to disagree with like…

It also said stuff that’s difficult to disagree with like… Use of social media should ensure clear, fair and not misleading communication with clients.

The trouble is, I ended up thinking…

Whose financial services industry is it anyway?

Is it your advice or your clients?

Is it your advice or your clients? Is it your product or your customers?

Is it your advice or your clients? Is it your product or your customers? Is is about consumer engagement or an industry that can be regulated?

Because the way in which people like to communicate is changing.

And so I thought I’d share my thoughts on…

What has changed Why that change is such a big deal

What has changed Why that change is such a big deal Why regulators need to reconsider

And – like any good story – it starts like this…

…our species just couldn’t help gathering together (and still can’t)

We couldn’t help swapping stories, enjoying each other’s company and enjoying safety in numbers

We’ve always liked to congregate together in order to exchange goods and services

Or congregate around shared values and beliefs

And, generally, have a good time

THEN ALONG CAME NEW MEDIA (And always with a fair number of barriers to take advantage of it.)

Beginning with illuminated manuscript where the barriers were…

So, in Europe, you had to be able to read or write Latin Language

Language You had to have access to ink and paper Technology

Language Technology Means of distribution

Language Technology You needed a network of distribution for content – like churches Means of distribution

Language Technology Means of distribution And, in order to do all that, you needed money Cash

Then with the invention of moveable type and the printing press…

You needed to be able to build or acquire presses Technology

Technology You needed a means of distributing the output of the presses Means of distribution

Technology Means of distribution And so you needed money to make all of that happen Cash

So then we enter the age of broadcasting…

Where the technological barriers become huge Technology

Technology Transmission networks require vast investment Means of distribution

Technology Means of distribution So this is an even bigger barrier to participation Cash

Now…because it relies on the transmission of a message via a medium…

…mass media content needs to be manufactured

So, at one end of the model, there’s an individual or organisation that wants to transmit something… Encoder

Which means they have to decide on the content of a message… Encoder Message

And select the media by which they intend to transmit that message… Encoder Message Medium

In order to reach an individual at the other end of the process… Encoder Message Decoder Medium

Encoder Message Decoder Medium …with access to the means to receive and understand the message

So the rules of engagement are determined by those with the ability to gain access to the medium… Encoder Message Decoder Medium

Encoder Message Decoder Medium …while consumers of content are subject to those rules

Web 1.0 continued this pattern Encoder Message Decoder Medium

Web 1.0 continued this pattern Encoder Message Decoder Medium But Web 2.0 has entirely changed the potential of this role

That’s because Web 2.0 has made the ability to publish content freely available Free

Free Technology Means of distribution So cash is no longer a big barrier. The main Investment is time. Cash

Free Technology The network for publishing and distribution is readily accessible Means of distribution

Free Which just leaves you with the means required to publish content… Technology

And, these days, a mobile device is all that you need…

So the rules of engagement are determined by those with ability to gain access to the medium… Message Encoder Medium

So the rules of engagement are determined by those with ability to gain access to the medium… Message Encoder Encoder Message Medium And the rules of engagement are determined by those with ability to gain access to the medium…

You end up with a model where – so long as they’re prepared to invest the time – individuals possess the same potential as organisations to publish content via platforms Content Provider Provider Content Platform

Which is social (As in socialist – everyone who’s able to can participate equally in a common means of sharing and publication)

Which means the social web offers the equivalent of this…

Because we’re able to real-ise offline interaction online via social platforms

Opting to participate in as few…

Which brings me neatly back around to the guidance for the use of social web platforms by the UK’s Financial Services Authority (FSA)

By choosing to treat social web platforms and tools as a medium that’s just like traditional mass media…

The FSA is focusing its attention on the use of the social web as a means of pushing promotional messages… 20%

80% Rather than encouraging the use of the medium for a vastly more useful ambition:

80% Rather than encouraging the use of the medium for a vastly more useful ambition: To encourage consumer engagement with financial services businesses and so take care of their personal financial wellbeing

80% Rather than encouraging the use of the medium for a vastly more useful ambition: To encourage consumer engagement with financial services businesses and so take care of their personal financial wellbeing However people want to

80% Rather than encouraging the use of the medium for a vastly more useful ambition: To encourage consumer engagement with financial services businesses and so take care of their personal financial wellbeing However people want to and not just how the FSA would prefer them to

The FSA is seeking to regulate for the worst that can happen and not the best. Otherwise known as…

The FSA is seeking to regulate for the worst that can happen and not the best. Otherwise known as… The Dr Pepper moment

But the FSA needs to pay attention to its own statutory objectives, which are…

Market confidence: Maintaining confidence in the financial system

Market confidence: Maintaining confidence in the financial system Public awareness: Promoting public understanding of the financial system

Market confidence: Maintaining confidence in the financial system Public awareness: Promoting public understanding of the financial system Consumer protection: Securing the appropriate degree of protection for consumers

And the FSA needs to heed its own principles of good regulation too…

Proportionality: The restrictions we impose on the industry must be proportionate to the benefits that are expected to result from those restrictions

Proportionality: The restrictions we impose on the industry must be proportionate to the benefits that are expected to result from those restrictions Innovation: For example allowing scope, where appropriate, for different means of compliance so as not to unduly restrict market participants from launching new financial products and services

Because by paying a disproportionate amount of attention to prevention of the Dr Pepper moment…

Because by paying a disproportionate amount of attention to prevention of the Dr Pepper moment… The FSA may prevent consumers from helping build a better UK financial services industry

Like the way Starbucks customers help the coffee-shop brand enhance and design new products and services

Or Lego enables its customers to design the kind of products that they’d like to buy themselves

Or the way in which 37Signals enables greater transparency and service experience for clients thanks to tools like Basecamp

Or the way Trip Advisor enables travellers to share their opinion of destinations so people have richer sources of information on which to base choices…

And even effect improvements in facilities by encouraging owners of businesses to address issues about the quality of their service

Consumer participation makes for better regulation

The use of social web platforms is only going in one direction

In 2000 27% of the UK population were online. In 2008 it was 76%. 86% of UK 18-24 year olds go online each day. And by 2013, 43.7 million UK consumers will be online. Sources: World Bank; eMarketer; Facebook

So consumer habits are changing…

So consumer habits are changing… Consumption of content is changing…

So consumer habits are changing… Consumption of content is changing… And consumer expectations of businesses are changing

Which means the FSA cannot ignore its own principle of good regulation for innovation:

Which means the FSA cannot ignore its own principle of good regulation for innovation: Allowing scope, where appropriate, for different means of compliance so as not to unduly restrict market participants from launching new financial products and services

…when the most significant participant in the marketplace always has been – and always will be – consumers

If the FSA continues to insist on regarding the social web primarily as a means of pushing promotional messages

Decoder Encoder Message Medium The rules of engagement will be determined by consumers with the ability to gain access to the medium…

…while regulated businesses will feel powerless to confidently engage with them Decoder Encoder Message Medium The rules of engagement will be determined by consumers with the ability to gain access to the medium…

Decoder Encoder Message Medium And consumers will just find some other way of obtaining what they want instead

Now that’s what I call a Dr Pepper moment

Twitter:@mrianthomas Blog: www.mrianthomas.co.uk www.newtradition.co.uk

Photography credits and sources 6: Financial promotions industry update No 05 (June 2010), Financial Services Authority 22, 23 and 66: Campfire image by Kara Brugman 24, 67 and 105: ‘Al mercatodi campo de' fior’ by Pyno Moscato 25: Vaulted roof interior by Tim Caynes 26 and 68: ‘Lamb & Flag’ by Julia Manzerova 29-36: ‘Manuscript’ by Liz Muffet 37-40: Hoe’s one cylinder printing press image, Wikipedia 41-44: TV aerial image by Víctor Nuño 60: iPhone image by William Hook 110:Dr Pepper can, Coca Cola Great Britain press centre

The Unsociable FSA's Dr Pepper Moment

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