Culture: Meeting Regulatory Expectations -
Recent scandals in the corporate and financial spheres have served to highlight the importance of a strong and well-embedded institutional culture. It is difficult to pinpoint any such scandal that was not, to a material degree, attributable to cultural failings. It comes as little surprise therefore that the regulatory authorities have sharpened their focus on culture.
In the United States, the Financial Industry Regulatory Authority (FINRA) has identified culture as a key area of current supervisory focus; and resolved to formalize its assessment of firm culture. During these appraisals, FINRA will be reviewing how firms establish, communicate and implement cultural values, and whether cultural values are guiding business conduct. “As part of this review, we plan to meet with executive business, compliance, legal and risk management staff … to discuss cultural values. We would also like to discuss how your firm communicates and reinforces those values directly, indirectly and through its reward system. We are particularly interested in how your firm measures compliance with its cultural values, what metrics, if any, are used and how you monitor for implementation and consistent application of those values throughout your organization.” (emphasis added).
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