From Blueprint to Practice: 5 Tips for Implementing Sample Policies

Let’s bust a myth: policy implementation isn’t as daunting as many financial institutions (FIs) believe it to be. While any new task brings challenges, adopting new policies can be a simple — and even seamless — transition with a strong framework.

But what does a successful policy implementation process look like? How can your FI customize sample policies to meet your organization’s needs? Let’s dive into questions and more.

Related: Policy Management Pain? Here’s How Financial Institutions Can Fix It

1. Assign roles and responsibilities

Implementing policies may seem overwhelming, but having a dedicated officer to manage them can ease the process at your FI by ensuring they are relevant, properly communicated, and tested regularly. Tasks typically delegated to a policy management officer include:

• Overseeing the annual (or biannual) approval and updating of policies.
• Communicating effectively with policy owners to ensure alignment and compliance with regulations and best practices.
• Testing and reviewing policies to confirm their effectiveness and relevance in light of changing regulations and industry standards.

The policy management officer may not be the policy owner, in which case policy owners should ensure their dedicated policies are reviewed promptly and updated with input from subject matter experts (SMEs) and other team members to reflect the latest regulatory changes, business improvements, and innovations.

While having a policy management officer oversee the process is ideal, an FI might opt to establish a policy committee to oversee policy development. The committee would conduct regular reviews and address updates triggered by events, such as new regulations or staffing changes.

Whether you employ a single person or multiple team members to oversee policy implementation, make sure everyone involved knows their roles and responsibilities.

Related: 6 Essentials for Flawless Policy Management

2. Know your priorities

Your FI has dozens, maybe even hundreds, of policies. Typically, these policies fall under one of two categories, while others may fall under both.

• Regulatory policies are designed to ensure compliance with laws, regulations, and guidance established by regulators. Examples include policies specific to regulations, such as CAN-SPAM Act compliance, Community Reinvestment Act (CRA) policies, and the Fair Lending Act.
• Operational policies guide the internal processes and functioning of the institution and are focused on efficiency, risk management, and operations. Examples include overdraft, branch closing, physical security, and remote deposit capture policies.

Examples of regulatory and operational sample policies are available through Ncomply.

Some of your FI’s policies may fall under both the operational and regulatory umbrellas, such as the Bank Secrecy Act (BSA), Anti-Money Laundering (AML), Countering the Financing of Terrorism (CFT), fair lending, business continuity management, incident response, and third-party risk management (TPRM) policies. These policies are fundamental to your institution’s success, ensuring regulatory compliance and supporting operational resilience during unforeseen events, such as natural disasters, vendor data breaches, or power outages.

Related: A Guide to Operational Resilience for Financial Institutions 

With so many options, consider these best practices:

• Consider the regulatory environment. Financial institutions should prioritize policies mandated by laws, regulations, or regulatory expectations. Staying compliant with evolving regulations is crucial to avoiding penalties, reputational damage, and legal issues. FIs can stay informed about recent enforcement actions against other institutions to refine their focus further. Understanding the areas regulators scrutinize most can show where policy updates are most urgently needed. Additionally, institutions should narrow their policy search to align with the specific expectations of their regulators and examiners. Overwhelmed by keeping up with the news? With Ncomply’s daily regulatory updates, you can stay updated on regulations and news related to your FI, which can inform your policy implementation process.

Related: Get the scoop on regulatory enforcements in our latest Enforcement Actions Roundup.

• Consider risk assessment results. A comprehensive enterprise risk management (ERM) framework can help institutions identify areas of heightened risk that require immediate policy attention. Policies should be aligned with the results of risk assessments to mitigate financial, operational, and compliance risks. For example, if a risk assessment identifies vulnerabilities in cybersecurity, a financial institution should prioritize reviewing and strengthening its information security policies. Additionally, risks associated with fraud, third-party vendors, or operational disruptions should guide policy updates and development efforts.
  
  
• Consider the impact on operations and customers. Institutions should focus on policies that directly impact critical operations and customer interactions. For most financial institutions, this includes information technology (IT) policies related to data security, incident response, and network security, among other critical areas. Additionally, policies governing consumer protection, loan servicing, account management, and fraud prevention are top-of-mind in today’s environment. Gaps or outdated policies in these areas can lead to operational inefficiencies, customer dissatisfaction, or regulatory scrutiny.

Related: Receive regulatory changes, guidance, and news like this right in your inbox!

These best practices will help you streamline the implementation process and allow you to proceed to the next step: customizing the policy.

3. Locate sample policies and customize as needed

No matter how well a sample policy is researched and written, you must customize it before adopting it. Every financial institution is unique, and there is no such thing as a one-size-fits-all policy.

When it comes to sample policy customization, keeping the process simple and straightforward is vital. Here are some items to keep in mind as you customize a sample policy for your FI’s use:

• Ensure consistency. Create a uniform template for policies with clearly defined sections such as requirements, testing and audits, and reporting. Consistent formatting makes it easier for stakeholders to navigate and understand the policies. Make sure any policy you adopt conforms to your template.
• Verify regulatory requirements. Cross-check the policy with applicable regulations to ensure the policy aligns with the regulations your FI must comply with. You don’t want a policy that creates extra work by having you comply with a rule that doesn’t apply.
• Customize roles and responsibilities. Assign responsibilities to specific departments, teams, or individuals. Ensure it aligns with your governance structure.
• Tailor the sample policy to your institution’s language. Adjust definitions and terms to match how your institution refers to processes, roles, and risks.

Related: How to Optimize Your Financial Institution’s Policy Development Process

4. Add resources

Supplementary materials may be needed to give your policies more context. Use these best practices to create a more organized and user-friendly policy document that effectively communicates essential information while keeping everything in order.

• Use appendices. Any supplementary documents you consider attaching to your policy should be included as appendices. This way, you maintain a clear structure within the main policy document while providing valuable resources for reference.
• Keep policies and appendices separate. Since appendices may require updates more frequently than the policy itself, keeping them separate helps avoid the need for constant reapproval of the entire policy document.
• Streamline changes. By attaching documents as appendices, any updates can be made independently. This approach prevents the central policy from becoming cluttered and ensures that changes to the appendices are easier to manage.
• Include helpful resources. When considering what to attach, consider documents that can enhance your colleagues’ understanding of the policy. For example, a wire transfer policy may benefit from a wire transfer intake form or an example of the wire transfer agreement can add context to help explain the policy’s purpose.

Related: How to Optimize Your Financial Institution’s Policy Development Process

5. Ensure ongoing monitoring 

Once a policy has been chosen, customized, and implemented, the policy management officer should continue overseeing all implemented policies as part of ongoing monitoring and management. This person is responsible for reviewing policies annually — or as often as needed — to ensure they are up-to-date and relevant, verifying that any named individuals are still with the organization, and addressing outdated information.

Consider management for a wire transfer policy. The monitoring and review process might consist of quarterly compliance reviews to ensure forms are filled, signatures are obtained, and other call-back procedures are completed. During the annual audit, internal reviews are conducted and then shared for board approval, while external examiners also evaluate the policies during their assessments for safety and soundness. Performance metrics, such as compliance rates, incident reports, resolution times, and survey feedback, are examples of performance metrics for measuring policy performance, improvement areas, and goal completion.

Communication is also a central part of ongoing monitoring and ensuring your policies are implemented properly. While the policy management officer should communicate the policy components to all stakeholders, it’s up to the leadership and board to communicate the importance of policy management to all employees and integrate policy education into employee training sessions.

Pushing your FI’s policies forward

Sample policy implementation doesn’t have to be a complex process. By following a structured approach that includes assigning clear roles, prioritizing critical areas, and customizing policies to fit your FI’s needs, you can help ensure a successful implementation.

Want to begin implementing sample policies at your FI?

Get your free sample policy from Ncomply!