Is your firm ready for the change in Regulation BI (Best Interest)?

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In June 2019 the United States SEC put forth changes in the way broker dealers and investment advisors deal with their customers, creating a fiduciary responsibility, and clear reporting of how your firm might be earning money from services and products provided to your clients.  These changes, while good for consumers, have created a regulatory burden on the industry to update policies and procedures, as well as formulating new ways to disclose your firm’s relationships with vendors and investment products.

The new regulation requires registered broker dealers and investment advisors to provide retail investors with easy to understand information about the confines of their relationship with your firm, ensuring potential clients can clearly see the differences between firm conflicts, fees, and other determining factors.  This has led to the creation of the CRS relationship summary form, as well as several other less formal processes all firms in the space must comply with.

While the rule changes happened in June 2019, the SEC gave the industry until June 30, 2020 to conform to the new requirements. It is generally recognized that all broker dealers and investment advisors will need to make changes to their operations, mandatory disclosures, marketing materials, and any system used for compliance.

If your firm is currently utilizing Excel, Word, and PDF documents to create your Policy Manual, it’s time to upgrade to a system that can help with the Reg BI changes and all your policy and risk management needs.  StrunkAccess provides an easy to use Policy Automation tool, allowing your firm the flexibility to find, and organize your policies in a logical way; helping to ensure compliance within your company.  Contact us today to find out more about how we can help your company achieve compliance for your regulatory needs.

Policy Management Made Easy

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Banks are required to have each and every policy approved by the board of directors on an annual basis. Many financial institutions keep their policies in Word or PDF documents on the back credenza of the officer in charge of each area of the bank. Operational and compliance policies are in the operations area of the bank; lending policies are in the chief lending officer’s file cabinet and accounting policies on the cashier’s desk.

On average, banks have between 40-60 policies that are reviewed throughout the year by the bank’s board and any changes to the policies are updated after board approval. This process can be cumbersome and hectic for most community banks. It doesn’t have to be that way!

Strunk has put together a terrific solution for managing the annual review and policy approval process. Rather than maintaining separate folders of policies, why not have them in one place with access to those who need to read, make changes, or review them periodically? That is what Strunk’s Policy Manager Program does.

Keeping a log of changes for senior management, outside auditors, or the regulators is important. Making updates or changes to policies should be easy to do. Redlined copies of the policies go to the board for approval. Your board only wants to review changes made to policies, not the entire policy. Strunk’s solution does all of this and policies are put into chapters based on each functional area of the bank. You send us your policies; we do all of the work. Access to each policy is given based on user access code. Contact us for a quick demo of the cost effective, yet comprehensive Policy Manager solution.

Strunk is pleased to announce the expansion of their offering to serve investment advisory firms and broker-dealers

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For over 40 years Strunk has been proud to work with financial institutions across the country to provide fee income strategy, risk management and compliance solutions. We are now bringing the power and reliability of our software applications to serve investment advisory firms and broker-dealers.

Any organization wants to be sure it has adequate policies and procedures in place to address the risks it faces. Strunk’s Policy Manager application is the perfect tool to help organize and manage these documents into a firm’s comprehensive compliance manual.

Due to the breadth of rulemakings and interpretations brought forth by the Securities and Exchange Commission that these organizations must adopt, internal policies and procedures are not only numerous but can be difficult to maintain. Strunk’s Policy Manager provides a structured, centralized single source of truth for this documentation.  Dan Roderick, Strunk CEO commented, “Five years ago, our very first client for Policy Manager happened to be a broker-dealer and investment advisory firm, so it only makes sense for us to place additional focus on that market”.

The solution features linkage of procedures to polices, automated change logging, as well as the ability to add multiple file attachments to each document. It is also possible to map policies to relevant risk assessment frameworks to make sure all bases are covered.

Additionally, the ability to assign ownership responsibilities at the section or individual policy level will provide granular control over read, edit and approval rights. Companies will be able to track employee acknowledgement of reading specific policies through application logs and reports. When users make changes to documents these updates will be automatically logged and logs can be filtered by particular time period or user.

PDFs can be produced from all documentation for external consumption along with redline versions of policy changes for comparison.

 

Make ODP Manager Letters and Events Work for You!

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Have you considered how you may customize ODP Manager for your institution?

Do your users need the ability to share information about ODP Manager accounts? ODP Manager allows users to create account comments and reminders. These events are available to all users and you can even add attachments! Overdue reminders are easily viewed each day when logging in.

Are there ODP related letters that you are generating manually? An Ad Hoc letter can be created for you to generate as needed – just enter the account number and the letter will pre-fill with the account information in ODP Manager. Once it is generated, it will be tracked and retained within ODP Manager just like your Collection and Custom letters.

Would you like the letter signature and contact information to change based on the account’s assigned branch? ODP Manager can do that for you!

Would you like your ODP letters to show your logos and footers instead of printing on letterhead? Would you like a user’s signature to print on your letters? If you provide your image files or text, they can be included in your ODP Manager letter templates.

Let ODP Manager help your users streamline account notation and letter generation by implementing these suggestions.

Opting in for Overdraft Protection

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Banks and Credit Unions have been providing Overdraft Protection programs for many years but 10 years ago all debit card and ATM transactions that created an overdraft had to have consumer consent before the financial institution could pay the debit and charge a fee.

Prior to 2010, paper checks were nearly 50% of all debit transactions a bank would process and today less than 8% of all debits are paper. Consumers paying with a debit card or electronic transaction is a common practice and we are nearing the situation many predicted 30 years ago of a paperless society for banking transactions.

If consumers want to take home their prescriptions or groceries when paying with a debit card when there are insufficient funds in their account, a bank or credit union cannot automatically authorize the transaction. Beginning on July 1, 2010 a financial institution had to obtain opt-in for these transactions pursuant to Regulation E.

A financial institution can obtain opt-in via their website, in person, by mail, or over the phone. It is not required that a financial institution obtain a signature on the prescribed Federal Reserve’s A-9 form, nor do the forms have to be kept for any period of time. If a consumer opts-in, a confirmation of the opt-in must be sent to the consumer.

Opting-in is a great service for those customers who want flexibility in managing their account. Others may not see any benefit to opting-in. But it gives consumers complete choice on how they want their account handled when it comes to paying for things they need when they are short on funds.

Three Business Continuity Tenants to Live By

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1. Business Continuity is not just a matter of keeping your software up and running
As a company keeping your application, services, or products alive for your clients is the most important service you provide. That follow through, on availability and capacity, is not just expected by your clients, it can quickly end your company if you fail.
With that in mind, Business Continuity is not just planning for the big events your company might face, it’s also to plan for the less visible changes your company can go through. From changes of leadership, to natural disasters, to regulation changes, planning to ensure your business does not have a disruption in services is vitally important. More often than not your new clients will be evaluating your plans to ensure your strategy helps enhance their operations rather than creates additional risk vectors.

2. Use the Cloud
While having all your data neatly tucked away with internal systems, hosting server banks at your company is starting to become more and more outdated as cloud computing becomes the standard. Having your data backed up to the cloud is a best practice in these situations, but there are often cheaper and easier ways to accomplish this. First, using cloud based applications can help eliminate your need to host similar applications in-house, which will relieve stress on your computing power, while at the same time helping to establish a data distribution that should build additional resiliency into your systems and processes. Additionally, utilizing a cloud-based application to store, manage, and distribute your business continuity plan is a best practice to help avoid losing your hard work from the unforeseen and helps to create visibility into your processes.

3. Ensure your plan is resilient enough to deal with the unknown
Having a plan and executing a plan are two different beasts. Creating the plan can be hard and time consuming, it is difficult to figure out different possible events and how they might affect your business but planning for the known is not just a nice to do, it’s a requirement. Regardless of how good your planning was, if you fail to address how to implement your plans, or don’t have clearly delineated lines of who will implement these plans, then you are in no better a situation than those who failed to plan. Ensuring your organization knows where your business continuity plan lives, and who is responsible for delineating that information or enacting the plan is highly important. Also, consider a fall back plan, should the members of your company tasked with executing the plan be unavailable, who will come in to save the day? Do they have access to the essential systems and contact information needed to get rolling on saving your company? Utilizing a single source of truth, a system known to hold these types of plans, is one of the best things your company can do to ensure your business continuity plan is utilized and followed.

StrunkAccess is a best in class GRC system built with these issues in mind. Not only do we support Risk Frameworks and Assessments, StrunkAccess can help you build a book of policies, controls, and procedures to address your company’s most pressing issues, including Business Continuity.

Strunk at ABA’s Conference for Community Bankers

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Strunk was proud to exhibit once again at the American Bankers Association’s Conference for Community Bankers February 9-11th. This event always proves to be one of our favorites, this year hosted at the Omni Orlando Resort at ChampionsGate. The event is a great way to reconnect with many customers and to build relationships with new bankers each year.

We welcomed the opportunity to show attendees the latest features offered by our Governance, Risk Management and Compliance (GRC) software. The solution now includes six GRC tools – Risk Assessor, Policy Manager, Controls Manager, Skills Manager, Issues Manager and Vendor Manager. We also had some great conversations regarding our state-of-the-art ODP Manager program and were able to visit with many long-time clients.

Strunk was excited to debut our new Vendor Manager application to the ABA membership. Vendor Manager provides an easy to follow standardized process to assess risk, gather due diligence materials, evaluate contracts and stores all vendor documentation in one convenient place. Vendor Manager keeps everything organized, is simple to use and of course, follows the latest FFIEC guidelines.

The most enjoyable part of the event just may have been our conference t-shirt station. Attendees were able to choose from one of 4 designs and watched while their customized shirt was made right before their eyes!

Congratulations to Paul McLaughlin of Litchfield Bancorp who was the winner of our TaylorMade Spider X Putter!

Thanks to all who stopped by, and to the ABA for once again putting on a great event. We are already looking forward to next year!

The Importance of Moving away from Spreadsheets for Vendor Management

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Over the past several years, regulators have targeted vendor management as one of their top regulatory concerns. With growing dependence on third parties for services,  the need for effective vendor management programs has increased. While regulatory framework for vendor management has been in place for years, the detailed expectations and efficiency have been missing. Most organizations have adopted a vendor management process using spreadsheets – which lacks consistency, efficiency, clarity, effectiveness and oversight.

A software solution will help you move beyond spreadsheets and onto a centralized system that will streamline your process and clarify the procedure for everyone involved. Having an automated system will help you manage your vendors more efficiently. Examiners are looking for programs that have automated contract management and due diligence alerts when documents are nearing expirations and also comprehensive assessments, such as risk and controls assessments. An automated system will manage these processes more effectively and efficiently by creating a consistent workflow that a spreadsheet can’t produce. Additionally, a software solution is a more effective way to manage your vendors because it will reduce likeliness of user errors that spreadsheets can cause by keying mistakes or employees not using the correct spreadsheet because there could be multiple copies that are being saved.

With increasing regulations and demands concerning governance and compliance, companies can no longer risk using spreadsheets to manage third-party vendor polices and procedures. By using a centralized vendor management software system, organizations can simplify and standardize their process, effectively managing vendor risk and relationships, and ultimately saving time and money throughout the entire company.

Focus on Reg E Opt-in Now More Important Than Ever

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It has never been more important to ensure that your financial institution has adequate coverage in regards to account holder Reg E opt-in. Reg E opt-in allows you to authorize ATM withdrawals and everyday debit card purchases, which may overdraw an account holder’s checking account, as long as they have provided their consent for you to do so.

Data recently released by a 2019 Federal Reserve Payments study shows that only 9% of all transactions in 2018 were from checks paid and 16% were via ACH. An overwhelming 42% of transactions were made via debit card. This decline in traditional transaction types, in favor of a debit card, means that it is extremely important to focus on the proper opt-in approach.

According to Part 205 of Electronic Fund Transfers (Regulation E), the financial institution must give “Reasonable opportunity to provide affirmative consent.”

A financial institution provides a consumer with a reasonable opportunity to provide affirmative consent when, among other things, it provides reasonable methods by which the consumer may affirmatively consent. A financial institution provides such reasonable methods, if—

  1. By mail. The institution provides a form for the consumer to fill out and mail to affirmatively consent to the service.
  2. By telephone. The institution provides a readily-available telephone line that consumers may call to provide affirmative consent.
  3. By electronic means. The institution provides an electronic means for the consumer to affirmatively consent. For example, the institution could provide a form that can be accessed and processed at its Web site, where the consumer may click on a checkbox to provide consent and confirm that choice by clicking on a button that affirms the consumer’s consent.
  4. In-person. The institution provides a form for the consumer to complete and present at a branch or office to affirmatively consent to the service.

By arming your team with the most effective procedures, you can be certain to achieve optimum opt-in for your organization. Strunk has a proven track record of achieving maximum results with financial institutions across the country. We help to more effectively reach your goals, all while remaining in compliance with applicable laws and regulations.

 

Does Your Overdraft Payment Program Have Exclusion Creep?

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For the past 27 years Strunk has been the leading provider of formal overdraft payment programs to financial institutions across the country. Many of these programs were put in place in the early to mid 2000’s, well before Regulation E changed the overdraft landscape in 2010.

Some financial institutions have let their programs die and others have put them on the back shelf as fee income derived from the service has gone down. Others continue to wonder what they can do to revitalize their 10-20 year old program.

So, what has happened? In virtually all financial institutions, the number of consumers participating in the formal overdraft program has dropped significantly. For one reason or another, the account holder has been taken out of the formal overdraft payment program. Strunk calls this “Exclusion Creep”. Virtually all of our 1,800 clients had 90%+ participation when the program was implemented but many institutions have 65-75% of their accounts in the program today.

Managing this is paramount to providing a good service to all of your customers and to maximizing fee income. Take a look at your consumer checking accounts and see if they have an overdraft limit assigned to the account. If not, re-qualify them and put them back in the program. Consumers want the service and managing the overdraft program like a line of business benefits everyone.

Does your financial institution have Exclusion Creep?

An independent certified public accountant has examined Strunk’s operations and found them to be in compliance with the AICPA’s Trust Service Principles. It was determined that Strunk meets the Security, Availability, Processing Integrity, Confidentiality, and Privacy criteria for SOC 2 established by the AICPA.