Bank regulators care about more than just policy acknowledgments

Financial services institutions need to have policies that cover all the regulations they must adhere to so they can operate in compliance consistently as an organization. Most organizations will focus on prioritizing policy acknowledgements from employees to prove compliance, and while this is important, it is only the minimum that organizations should be doing.

Today, regulators are looking to see if policy management programs are updated in a timely manner, consistent with both updated regs, enterprise risk management, and related procedures, and communicated effectively to employees.

Timely policy updates

When a new decision comes from a regulatory body, it is up to compliance officers to understand what the changes are and how they will affect the current policies and procedures that are in place.

The specifics of these regulations can sometimes be released in documents that are hundreds of pages long, which can significantly impact how quickly changes can be made. Even after the new regulations are fully understood, compliance officers still need to find the relevant information necessary to update or a policy template they can use to develop a policy that meets their needs. They also need to work with leadership to review and approve the new policies before they can be shared with the appropriate employees.

Policy management software should provide compliance professionals with all the information they need to draft and edit policies in one place. Instead of spending time searching for and interpreting all the necessary information to work on developing policies, compliance professionals can use the platform to stay on top of everything through helpful tools, including:

• Regulatory alerts that track regulation changes and what policies could be affected
• Regulation overviews that summarize new or revised regulations for compliance professionals
• Policy considerations, which compliance professionals should factor in when updating or creating policies
• A repository of policy templates that provides and consistent standard language and look to use when developing policies

Aligning consistent policies and procedures

Financial services organizations should be using both policies and procedures to educate all employees, and applicable third parties on compliant behavior. Policies are meant to cover what to do in certain situations and why that course of action must be done, while procedures detail how to do specific tasks, incorporate the compliance requirements and risk management into day-to-day operations, and including who’s responsible and what each step should be to complete that task.

There are many regulations that can affect multiple departments at an organization, so it is important that each department works together to be aligned on the policies and procedures that affect them. If each department is siloed, leadership may create the policy, but each department is likely to create their own procedures which could easily conflict with the policy or other departments’ procedures, creating significant compliance and risk management concerns.

Departmental decision makers need to understand the purpose of the policy they create and develop procedures that ensure the policy is being followed as intended. As part of the review process, it is important for decision makers to ask questions like “how does this task help us meet our strategic goals” and “who on the team should be responsible for managing each task” to make sure their procedures are aligned with their policies. This process should also be done with all departmental decision makers if there are policies that overlap between departments.

This process should be done with the supervision of an organizational compliance subject matter expert. Compliance professionals understand what regulators are looking for and can provide guidance on how to update policies and procedures to align with updated regulations more closely. They will also help ensure everything is updated at the same time, which will help each department follow the new policies and procedures that have been developed. Reviewing everything with them to create the final policies and procedures that will be used will ensure everything and everyone is aligned which will help the organization operate more effectively.

Communicating effectively

The best policies and procedures don’t mean anything if an organization doesn’t communicate them clearly. Policy management software offers organizations the ability to communicate policy and procedure updates quickly while empowering employees to find everything they need in one tool. At the very least, policy management software should make it easy for employees to review and acknowledge new and updated policies and procedures.

Good policy management software allows organizations to take acknowledgements further by quizzing employees about each policy and procedure to test comprehension before they are allowed to acknowledge them. Automated communication tools are another helpful feature that allows compliance professionals and department managers to send reminder messages to help keep employees on-track with their outstanding tasks.

Policy management software should also provide individual users with access to a variety of different tools and resources they can use to find relevant policy information for themselves. Within the platform, there should be functionality to allow users to find and store specific information they are looking for, including:

• A centralized repository of all current and archived policies
• Policy bookmarking, so users can mark important policies and access them from their dashboard
• Policy distribution functionality to allow users to share policies and updates with each other in-platform
• Acknowledgment tracking, so users and managers can confirm which policies they are appropriately trained on
• In-platform communication tools that enable employees to ask questions of compliance managers and compliance managers to communicate new updates and tasks to employees and manager

Consider an end-to-end solution

Financial services organizations that use manual policy management processes to update and communicate their policies and procedures face a daunting task to show regulators everything they are doing is effective.

To keep up with everything, it is essential that your organization encompasses an end-to-end solution that helps when creating, updating, communicating, and tracking policies and procedures. Your organization’s solution needs to have at least the following:

• Industry-specific regulatory resources such as regulatory alerts (CFPB changes, FDIC updates, NCUA rules, etc.), policy considerations, policy templates, and regulation overviews
• Powerful communication tools that help you communicate policies and procedure effectively, including a centralized repository, full text search, acknowledgement tracking, quizzes, and more
• Focused processes to help compliance professionals make timely updates and collect acknowledgements by utilizing managerial and user dashboards, report subscriptions, and automated reminder emails
• Easy setup and administration to ensure your organization can quickly start managing policies and procedures effectively through bulk data importing, a human resources information system (HRIS), and configurable and reusable workflows

Christopher Boersma, CRCM, CAMS, CISA, CC, is Product Manager at BAI.

An expanded version of this article was initially published by BAI’s Learning and Development team. Read more on BAI’s Policy Manager.