Path to a perfect policy

by: Suzie Higbee

One of the first places a regulator will start during any given examination is by looking at a financial institution’s policies, which is one good reason you should keep yours in tip-top shape. How exactly do you build that perfect policy? Sometimes the best way to figure out how to make the perfect policy is by hearing what elements contribute to a bad one. The following four mistakes are the most commonly made, yet the most important to avoid:

No policy at all

While rare, we do occasionally see institutions that are missing one or more key policies. Not only does this burden the auditor or examiner—who must now interview personnel to obtain information about processes and procedures—but it creates operational risks for the institution as well. In the absence of written guidance, personnel are far more likely to make mistakes (and possibly costly ones at that). How will your staff know how to handle uncommon or unusual situations without guidance from a policy?

An overly generic policy

Sometimes institutions borrow their policies from the Internet or from another financial institution, or use a generic policy provided by a vendor. While this may not be a bad place to start, a truly effective policy needs to be customized. For example, a BSA policy should contain member identification policies specific to the institution. This leads to the third issue, which is….

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