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Bank Regulators Caution about Boilerplate Policies and Manuals

Bank Regulators Caution about Boilerplate Policies and Manuals

In our ongoing efforts to research and pass along current trends, we recently met informally with several Federal Bank Regulators to get their thoughts on the good, bad, and ugly regarding policies and procedures in banking and how P&Ps affect bank examinations and standardizing operations in bank branches. Their insights and stories were enlightening, and they suggested caution when using boilerplate policies and manuals. 

Even if you’re outside of the banking industry, much of their insight is applicable and just makes good business sense.

Current regulators are not as concerned with the exact format for writing policies and procedures or any strict mindset regarding P&Ps. From their perspective, a policy and procedure manual exists first and foremost to ensure that employees know what to do. That’s their primary concern. P&P manuals should clearly explain how to handle the various specific situations that come up in actual operations.

Having written policies and procedures that clearly outline “the directions we want employees to take” is the best way of doing that. For example, if your bank is launching a new product, the regulators want to see that you have policies and procedures in place beforehand so that everyone knows who does what, when to complete tasks, and what the exceptions are.

More than one regulator commented that many banks don’t do a very good job of this. Many buy pre-written handbooks or templates but just put them on the shelf, thinking that is good enough. They fail to customize their policies and procedures for their own unique situation and don’t apply them. As one regulator told us: “A dead giveaway is when the bank pulls out a policy they bought somewhere and didn’t even bother to change the name in it.”

Besides the obvious lack of time excuse, we asked the regulators why they thought so many banks missed the mark here. We’ll share some of their feedback in later posts, along with some possible solutions. So stay tuned.

If you are interested in delving into the details of writing policies and procedures that get better results, contact us to learn more about our Zavanta software. 

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