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Thursday, March 16, 2017

Policies and Procedures – Separate or Combined Documents

Our company has a single set of policies and procedures combined into one document. I have heard people talk about having them in separate documents. What is the benefit of splitting them out?

We frequently see the same common mistakes companies make when writing policies and procedures. Combining policies and procedures all in the same document is one of the biggest mistakes that can keep your policies and procedures from being utilized to their individual fullest extent.

Not having a clear understanding of the difference between a policy and procedure is where most firms get into trouble. Here’s a simple definition of both:
  • A policy is a guideline or statement of position with respect to a given topic, and
  • A procedure is a set of steps or instructions for completing a task. 

Your Quality Control Policy is a good example. The policy itself contains a compilation of the rules and guidelines mandated by the governing agencies and the overlay of policies set forth by the company.

Related procedures to this policy are the “how to’s” that cover such things as the steps required for when and how to review a specific loan type, how to enter the review findings in a report set or in a database or how to prepare a monthly quality control report, and so forth. 

When policy and procedure information is combined in a single document, employees have a hard time finding what they need – and so they may guess or ask a co-worker, or worse yet not complete the required action.

Your policy and procedure information should be covered in separate documents that are linked together for easy reference. That way employees can more rapidly find and understand the policy, then find the specific task steps they need to carry out the policy.

If you have questions or concerns regarding the policies you have in place, we are happy to work with you to determine that 1) your policies meet agency guidelines and 2) the policies and procedures are properly correlated.

Brandy George
Director/Underwriting Operations Compliance
Lenders Compliance Group, and
Executive Director/LCG Quality Control