Banks and other financial services institutions can, and should, take valuable lessons away from Wells Fargo’s recent troubles.
The Consumer Financial Protection Bureau recently hit the company with a $100 million fine for secretly opening deposit and credit card accounts customers did not request or agree to. The illegal scheme netted the bank profits from fees and other charges associated with those unauthorized accounts.
A Toxic Corporate Culture
Whistleblowers have accused the bank of promoting a corporate culture that valued revenue over ethics, put unreasonable pressure on employees to hit sales quotas, forced employees to work unpaid overtime, and looked the other way as illegal activity became rampant.
Jurispect Helps Create a Culture of Compliance
As a result, thousands of employees at one of the world’s leading financial institutions preyed on unwitting customers, which they claim they did in order to avoid being fired. The company paid dearly for the sake of a relatively small short-term profit, and will continue to pay in the future as the result of their tarnished image.
Ultimately, the Wells Fargo compliance department did not perform its primary function, which has cost the company millions of dollars and wreaked untold damage to its brand and reputation. Tighter controls over employee behavior and investigations of internal and external complaints concerning unethical or illegal behavior could have prevented much, if not all, of the behavior that triggered the fines.
Strong leadership would have ensured that the compliance department had the resources, support, and autonomy to stand up to company decision makers. At Wells Fargo, however, it seems like compliance took a backseat to aggressive sales and revenue goals.
The CEO of Wells Fargo claims that he knew nothing about these illegal transactions. If that’s true, then it is an admission that the company did not create a culture that made compliance the primary factor in all business decisions.
Tough Times Require Bold Vision
Over the past few years, banks have lost some of their most reliable and robust revenue streams, as a prolonged environment of extremely low interest rates has dried-up many traditional profit opportunities.
Economic headwinds are no excuse for noncompliance and abandonment of ethics, however. Instead, such challenges should stimulate innovation in compliance departments to make sure that companies follow all rules and regulations while still hitting revenue goals.
All financial services institutions must cultivate, nurture, and incentivize a powerful and all-pervasive culture of compliance – not restrict or punish those who do the right thing.
Nurturing a Compliance-Oriented Culture
Putting compliance first doesn’t mean that companies have to sacrifice growth. Instead, companies must simply ensure that their compliance teams have the resources and authority necessary to make sure that all employees – from the C-suite to the rank and file – understand the importance of compliance and have training on how to achieve it.
In order to create a culture of compliance while still hitting revenue goals, companies should use the latest compliance technology so compliance departments can optimize their efficiency and communicate with the broader organization more effectively.
Jurispect helps compliance professionals stay current with the latest rules and proposed rules, enforcement actions, and agency updates, and makes it easy to communicate changes to the rest of the organization. Request a demo to see how Jurispect can help strengthen your company’s culture of compliance.