Bank Policy Writing Tips

What Do I Need?

The first step is to determine what your state and federal regulator requires you to have in place.  They should be able to provide you a list of compliance related policies they expect you to provide during safety and soundness and compliance exams.

The second step is to review your policy needs from a strategic and operational point of view.  Ask yourself what major policies you need to have in place in addition to those required by your regulator.  A review of each of the following areas of your organization should be considered:

  • Administration
  • Human Resources
  • Lending; and
  • Operations

At the beginning it is best to concentrate on areas of risk, especially those where audits will take place.  Another consideration is to concentrate on personnel, products, services, or other areas where your staff would benefit from established policies or procedures.

Basic Rules of the Policy Road

Creating an effective policy manual is easier than you might think.  All you need to know are the "Basic Rules of the Policy Road:"

Create a Unique Document.  Every financial institution is different, and so should your policies.  Starting with a good template is just that - a good start.  Interview people within your organization, ask questions, find the facts, and create a document that mirrors your operations and philosophies.  It is best to create a policy that contains subsequent procedures that support its directives, rather than pointing to another document or binder.  Regulators and independent auditors like to see one simple reference source for your institution's policies and procedures.

Create a Draft.  Using our product as a starting point, take into consideration what you have learned from the interview process and create a drafted document.  Your draft, along with our original product, should be submitted to your management committee or others who are involved in the creation process for review and discussion.  The draft should be reviewed and any changes made before a final version is submitted for approval to senior management and/or the board of directors.

Use a Standardized Format.  Each document in your policy manual should have an identical layout.  It is best to make one person accountable for your policy manual to ensure consistency and content, yet development should be supervised by a management committee.  Use the same format (e.g., font size, title location, table of contents, date area, header, footer, page numbers, etc.) for uniformity.  The use of a numbering and volume system (i.e., documents indexed based upon the subject matter, such as Administration - 100 Series, Compliance - 200 Series, Lending - 300 Series, Operations - 400 Series, etc.) will also promote ease of use and reference.

Keep it Simple and Concise. Write only what needs to be written in a language that everyone understands.  Be specific, and keep to the point.  Try to write the policy like a book, from beginning to end, achieving an easy flow of understanding for each topic.  Begin with a major topic and provide the required detail for each.

Assign Responsibility and Accountability.  It is important to be specific when assigning responsibility and accountability to ensure your staff clearly understands assigned responsibility.  It is best to not list specific employee names, but rather titles or branch or department names (e.g., Chief Financial Officer, Main Office, Loan Servicing Department, loan officer, teller, etc.) when applicable.

Provide Exhibits.  Exhibits are various pieces of support documentation used as attachments to a particular policy or procedure.   As an example, forms, reports, diagrams, work tickets, contracts, and other materials may be used.  It is best to use completed examples, using fictitious names, addresses, account numbers or dollar amounts to help in the overall understanding of intended use.

Keep it Current.  The best policy is one that is reviewed on a periodic basis and amended as needed.  Board approved policies generally are to be reapproved on an annual basis.  Procedures, more often than policies, require periodic maintenance based upon the recommendations of personnel using them on a daily basis.  Careful consideration must be applied to edits, updates or modifications to ensure that proper control is maintained.  The final authority for the approval of revisions or modifications lies with management and/or your board of directors.  Providing bolded, underlined, notated or strike-through marks helps everyone involved in the revision and approval process.

Provide Easy Access.  Ensure your policy manual is easily accessible to designated personnel via tracked distribution in hard copy form or electronically on your computer network.  If distributing in hard copy form, attach a cover "circular" that briefly mentions the new or updated policy.  Make the recipient accountable for ensuring the new or revised policy is promptly placed in his or her manual by requesting a signed acknowledgment.  If distributing electronically, your e-mail will suffice as a cover "circular" and a return receipt reply will suffice as the acknowledgement.

Train Your Staff.  A new or revised policy or procedure may require staff training on its directives.  This is an essential part of the education process.  In some instances (usually dealing with regulatory issues), management must not only conduct training with staff but also provide evidence of that training.  Documenting, recording and controlling training records are critical to ensure the success of compliance and independent audits.

How Do I Begin?

Bankpolicies.com, offers an extensive list of comprehensive policy, procedure, job description and form templates to get you going in the right direction.  We offer Volume Discounts for first time clients and our Legacy Rewards Program that allows existing clients to include their past order(s) as credit towards volume discounts on new orders.  Contact us today to see how we can help.

We're here to help you!

If you need help choosing the right documents for your financial institution or just need expert advice, BankPolicies.com is ready to help you.