When “More Words” Made Your Policy Worse, Not Better

I talk with teams often who tell me their credit policy has become...a lot. Too long, too dense, and somehow still unclear on important topics.

Sound familiar? Here's what's usually going on:
  • 𝙈𝙤𝙧𝙚 𝙬𝙤𝙧𝙙𝙨 were added because someone thought it would be more clear. Instead, it's more confusing.
  • 𝙏𝙤𝙤 𝙢𝙪𝙘𝙝 𝙥𝙖𝙨𝙨𝙞𝙫𝙚 𝙫𝙤𝙞𝙘𝙚. Here's what I mean:
   • Passive: It should be noted that the risk rating assignment is ultimately the responsibility of the lender.
   • Active: The lender is responsible for assigning accurate risk ratings.
  • 𝙈𝙤𝙧𝙚 𝙞𝙣𝙛𝙤𝙧𝙢𝙖𝙩𝙞𝙤𝙣 𝙜𝙚𝙩𝙨 𝙖𝙙𝙙𝙚𝙙 with every annual update, but information is rarely removed.
  • 𝙔𝙤𝙪𝙧 𝙥𝙤𝙡𝙞𝙘𝙮 𝙗𝙡𝙚𝙣𝙙𝙨 "𝙥𝙤𝙡𝙞𝙘𝙮" 𝙬𝙞𝙩𝙝 "𝙥𝙧𝙤𝙘𝙚𝙙𝙪𝙧𝙚." Policy should cover the what and why of your institution's approach to credit. Procedure tells readers how that policy shows up in daily work.

The leaders I work with know their policy isn't perfect, but it's not causing a five-alarm problem either. And because real improvement takes sustained focus, the task gets pushed to next quarter, or it gets a quick pass that just adds more words.

Here's another hurdle: 𝘁𝗵𝗶𝘀 𝘄𝗼𝗿𝗸 𝘁𝗮𝗸𝗲𝘀 𝗰𝗼𝗻𝗰𝗲𝗻𝘁𝗿𝗮𝘁𝗶𝗼𝗻. Real, uninterrupted focus time. The kind that's nearly impossible to find when you're already running a lending function. It's not that leaders can't write clearly. It's that 𝗰𝗹𝗲𝗮𝗿 𝘁𝗵𝗶𝗻𝗸𝗶𝗻𝗴 𝗮𝗯𝗼𝘂𝘁 𝗽𝗼𝗹𝗶𝗰𝘆 𝗿𝗲𝗾𝘂𝗶𝗿𝗲𝘀 𝗯𝗹𝗼𝗰𝗸𝘀 𝗼𝗳 𝘂𝗻𝗶𝗻𝘁𝗲𝗿𝗿𝘂𝗽𝘁𝗲𝗱 𝘁𝗶𝗺𝗲 𝘁𝗵𝗮𝘁 𝗹𝗲𝗮𝗱𝗲𝗿𝘀 𝘀𝗶𝗺𝗽𝗹𝘆 𝗱𝗼𝗻’𝘁 𝗵𝗮𝘃𝗲.

As your team grows, 𝗽𝗼𝗹𝗶𝗰𝘆 𝗲𝘀𝘁𝗮𝗯𝗹𝗶𝘀𝗵𝗲𝘀 𝘁𝗵𝗲 𝗰𝗼𝗺𝗺𝗼𝗻 𝗹𝗮𝗻𝗴𝘂𝗮𝗴𝗲 𝘆𝗼𝘂𝗿 𝘁𝗲𝗮𝗺 𝘀𝗽𝗲𝗮𝗸𝘀. If it isn't written clearly and concisely, the team's work starts to reflect that: disagreements about what policy actually says, loan structures nobody's sure are permitted, and employees who understand their own roles differently than their teammates do.

If leveling up your policy is still sitting on your to-do list, I'd love to talk. 𝗜𝗳 𝟮𝟬𝟮𝟳 𝗶𝘀 𝘁𝗵𝗲 𝘆𝗲𝗮𝗿 𝘆𝗼𝘂 𝘄𝗮𝗻𝘁 𝘆𝗼𝘂𝗿 𝗽𝗼𝗹𝗶𝗰𝘆 𝘁𝗼 𝗯𝗲𝗰𝗼𝗺𝗲 𝗮 𝗰𝗼𝗺𝗽𝗮𝘀𝘀 𝗶𝗻𝘀𝘁𝗲𝗮𝗱 𝗼𝗳 𝗮 𝗰𝗼𝗹𝗹𝗲𝗰𝘁𝗶𝗼𝗻 𝗼𝗳 𝗮𝗰𝗰𝘂𝗺𝘂𝗹𝗮𝘁𝗲𝗱 𝗲𝗱𝗶𝘁𝘀, 𝗹𝗲𝘁'𝘀 𝗰𝗼𝗻𝗻𝗲𝗰𝘁.