DES MOINES (4/9/12)--Incomplete or nonexistent policies can trigger a sequence of serious consequences and potentially end a profitable product or service, according to a new white paper from PolicyWorks.
"More than simply alerting examiners to a problem, insufficient policies expose a credit union to needless risk," writes PolicyWorks Senior Compliance Officer Jami Weems. "Policies exist for a reason--to provide guidance and to ensure rules are consistently followed by all credit union staff."
In an excerpt from her white paper, "In Turbulent Times, Credit Union Policies Are Life Preservers," Weems notes that examiners operate under the premise that credit unions are up to date on all rules and regulations, which means they expect a credit union's policies and procedures to reflect current practices.
If a credit union has a new product or service that requires a new policy (or if a policy for an existing product or service was never drafted), Weems offers two ways to simplify the process.
The first is to borrow from a similar financial institution. By their very nature, credit unions are cooperative, so many are willing to share their policies. If employing this method, however, use caution, Weems notes. Examiners want to see that policies accurately reflect business practices, so credit unions should analyze any policy borrowed from another credit union carefully after it's been tailored, to ensure it complies with the necessary regulations.
The second way to simplify the process of writing a new policy is to download customizable templates. To save time--and the potential for red-flag mistakes--downloading customizable policy templates is an excellent route for credit unions of all sizes, even those fortunate enough to have a compliance specialist on staff, Weems said.
To be in compliance with all the current rules and regulations, Weems recommends credit unions put together a plan for updating policy manuals. This plan, she says, needs to detail how the credit union will make policymaking and maintenance a part of the credit union's overall strategic plan. "Think of this plan as 'a policy for policies,'" suggests Weems.
PolicyWorks is an Iowa-based firm that provides solutions to credit unions' regulatory compliance needs.
To download the white paper, use the link.