I tested this on dev, and it works fine. As with all IFF stuff, you need to have them on your list, and you on theirs. Think sensor sharing. Otherwise, if you think about it, you could switch you IFF to whatever, chat with them, then switch back. Which is not right.
Hmm, when I spoke to my owned NPCs on dev they came up with the text as though I was an ally. Admittedly I didn't check results for when I was in a faction and was using its IFF, but using your own IFF, so long as freindly/enemy tags are reciprocated, should work fine.