I was reading an article tonight on the ethics of blogging. The article located at IndolentDandy.com focused on the restaurant review industry in Melbourne, Australia.
While not banking related, the post made some strong points that carry over to banking and financial services in general.
The piece focused specifically on bloggers. I probably don't have to explain much about blogging or what a blog is...you are viewing one.
The essence of the article was whether it was ethical to accept payment as part of a blog, and if it is ethical, what are the ground rules (disclosure, etc.).
As I thought about it relative to banking, I had a tough time thinking of examples where any vendor of traditional banking services would even consider paying a banker that blogs on behalf of his institution. I can't imagine a check printer doing so nor the company that makes the plastic for debit cards. It isn't really necessary for them since they usually have a monopoly at the respective banks they serve.
Once I got past the traditional bank products and services I moved on to non-traditional non-insured products and then...BINGO!
The mutual funds and annuity companies and that offer their products to banks face significant competition for customer dollars. As such, many of these companies pay banks "revenue sharing" payments. Under certain circumstances these payment create a conflict of interest in fact or perception.
To the extent that a bank maintains a blogging effort, that bank should be aware and cautious to the extent it touches on nondeposit financial products. Any recommendation, particularly if the bank receives some form of revenue sharing payment, may create a compliance nightmare - particularly related to the broker-dealer suitability requirements.
Of course, the best course of action is to steer clear of mentioning any specific fund or insurance company. However, if that is not possible, at a minimum, the blogger should run some form of disclosure past the Legal Department to ensure that the post, no matter how cursory, is fully compliant with the compliance rules.
As Lydia Dishman says, blogging is a tremendous tool for building a following. A well-managed blog invites customers to comment and become part of an intimate conversation with the company, reinforcing brand attachment. The blogging process is also very noncomplex, creating the ability for most bankers, regardless of position or experience, to create a tremendous asset (or liability) for the organization. As such, before hitting the Publish button, bank bloggers should receive the Legal or Compliance Department's blessing before putting something out that could potentially violate some law, rule or regulation.
In lieu of such review, banks can develop some general guidelines regarding the type of communication that can and cannot be posted without running it up the flag pole. Regardless, the individual should be well versed in the nuances of social media messaging as well as regulatory compliance.
It is unfortunate but it is a reality.