2016 has been a trying year for financial institutions. Record Consumer Financial Protection Bureau (CFPB) penalties were levied and well-known financial institutions found themselves on the front page of news publications because of widespread compliance violations. In the wake of these highly-publicized compliance breaches, business analysts opined on the possible root causes of these events. Often the answer was a simple one: company culture.

Company culture is a unique set of internal norms, values, beliefs and behaviors that characterize the spirit of a firm. From the outside, one might describe the culture as entrepreneurial, hierarchical, collaborative or top-down, to name a few. Whatever the label, culture plays an essential role in effective or ineffective compliance.

Healthy company cultures have high levels of engagement, commitment, productivity, innovation--and good compliance. Unhealthy company cultures do not. There have been some compliance success stories in 2016 and culture played an important part, especially given the aggressive regulatory landscape. Doing the right thing because it is good business ensures that compliance becomes part of a company’s culture, making it stronger. Without a strong compliance culture, compliance becomes merely ‘check the box.’


By: Sheryl Smikle Ph.D