The Financial Industry Regulatory Authority Inc. (FINRA) highlighted a firm’s culture of compliance as being of utmost importance in the regulator’s 2016 annual examinations letter released on Tuesday.
"A firm's culture is both an input to and product of its supervisory system, including its approaches to identifying and managing conflicts of interest and ensuring the ethical treatment of customers," FINRA explained in its annual letter to members.
FINRA outlined five indicators of firm culture it will study, including:
“whether control functions are valued within the organization;
whether policy or control breaches are tolerated;
whether the organization proactively seeks to identify risk and compliance events;
whether supervisors are effective role models of firm culture;
and whether sub-cultures (e.g., at a branch office, a trading desk or an investment banking department) that may not conform to overall corporate culture are identified and addressed.”
Other areas of focus for 2016 include conflicts of interest, technology, sales practices, outside business activities, and ETFs.
The full 13 page summary can be accessed here: FINRA 2016 Letter