Step by Step QC Plan Checklist: Financial Institutions

Step by Step

Quality Control Plan Checklist

Introduction

The following guide aligns with industry requirements and best practices, ensuring financial institutions remain steadfast in their commitment to quality within the ever-evolving landscape of financial services. By following this guide, financial institutions can not only enhance their operational excellence but also strategically minimize their risk exposure. Throughout this comprehensive guide, we will cover the key components of a sound QC plan, providing valuable insights and practical recommendations.

1

Define the Purpose:

Clearly define the purpose and objectives of your Quality Control (QC) plan, emphasizing its role in enhancing operational efficiency, risk mitigation, and overall quality management for the benefit of members and stakeholders.

Identify Your Risk Appetite & Incorporate a “Commitment to Quality” Statement:

Articulate your credit union’s risk tolerance and commitment to maintaining high-quality standards, demonstrating a dedication to delivering reliable financial services to members. 2

3

Define Separation of Duties, Eliminate Conflict of Interest & Establish Authority:

Specify Workgroup Structures:

• Sampling Requirements: Specify criteria for selecting samples, enabling systematic assessments that align with your credit union’s risk profile and investor / regulatory requirements.

Establish a framework that clearly defines roles, minimizes conflicts of interest, and outlines the authority of each stakeholder in the QC process, ensuring accountability and transparency (principle of least privilege). 4

• Discretionary Selection Criteria: Define criteria for discretionary reviews, allowing flexibility in targeting unique circumstances and risk factors while maintaining consistency.

• Timeframes: Establish clear timeframes for different stages of the QC process, promoting consistency and timely identification and remediation of potential issues.

Key to Success

Leverage technology to streamline sample selection methodologies and slim down overall QC turn times. ACES technology allows financial institutions to automate their QC workflows, increasing operational efficiencies and the overall effectiveness of their QC program. Continual review and updating of sampling strategies ensures that challenges and risks associated with different aspects of credit union operations are effectively tested.

5

Delineate QC Workgroups:

i. Post-Closing Random

ii. Post-Closing Discretionary

iii. Pre-Closing / Pre-Funding

iv. Non-Originated

v. Early Payment Default

vi. Mortgage Servicing

vii. Consumer Lending

viii. General Loan Servicing

ix. Branch Audits

x. Fraud Investigations

Detail Review Workflow:

Clearly outline the scope of reviews, components to be assessed, methodologies and terminologies used, and corresponding review policies and procedures.

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Specify Risk Classifications:

• Severity scale

• Defect taxonomies

• Overall risk ratings

• Target defect rate(s)

Key to Success

Consistently apply defined risk classifications, terminologies, and review procedures to maintain a uniform and standardized approach. This consistency enhances the reliability of assessments and facilitates clear communication within the QC process as well as with external stakeholders.

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8

Document Reverifications

Policies and Procedures:

• Employment / Income

• Assets / Source of Funds

• Credit Report

• Tax Transcripts

• Field Review Appraisals

• Occupancy (Primary Residences)

Key to Success

Integrate reverification procedures seamlessly into your QC workflow. This ensures that critical information is assessed efficiently and effectively, promoting comprehensive evaluations and minimizing the risk of oversights and wasted resources.

Outline Remediation Procedure:

Establish a straightforward process for identifying and addressing defects, outlining corrective actions and remediation plans to enhance continuous improvement.

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Key to Success

Foster real-time collaboration among stakeholders in the remediation process. A collaborative approach done in real-time enhances the quick identification and resolution of defects, speeding up the continuous improvement cycle of QC.

10

Define the Process for Identifying & Reporting:

• Fraud

• Misrepresentation

• Suspicious Activities (SAR)

• Investor Self-Reports

Specify Staffing & Training Requirements:

Specify the qualifications and training requirements for staff involved in the QC process, ensuring competence and adherence to best practices.

Key to Success

Ensure staff stay informed on industry standards and best practices. Incorporate automated systems that deliver industry updates, keeping the QC team up-todate and prepared to meet evolving requirements while minimizing the time needed to research and distribute these updates effectively.

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12

Delineate GSE and Agency specific requirements:

Specify any additional QC requirements mandated by government agencies and Government-Sponsored Enterprise.

• Turn Times

• Reverification Attempts and Methods

• Collateral Review P&P

Outline QC Reporting Requirements:

Clearly define the reporting format, frequency, and distribution channels for QC results, ensuring effective communication with all stakeholders.

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Key to Success

Tailor reporting formats to cater to various stakeholders, ensuring that QC results are communicated effectively at all organizational levels. Provide comprehensive insights that enable informed decision-making.

VIEW EXECUTIVE LEVEL SAMPLE REPORTS

DISCOVER EASE OF REPORTING WITH ACES

Regularly update your QC plan based on internal historical analyses as well as benchmarking against industry leaders, ensuring it remains dynamic and effective. 14

Outline requirements for Corrective Action & Preventative Action (CAPA) Planning and Tracking:

Delineate requirements for CAPA planning and tracking resulting from QC findings, facilitating accountability and progress monitoring.

Quality Control Plan Review:

Establish a periodic review process to keep the QC plan aligned with organizational objectives, incorporating insights from industry trends.

Key to Success

Overall Key to Success

It’s important to have a flexible, intuitive and user-defined quality control and compliance platform that you can trust. ACES Quality Management stands as a ready companion, offering an automated quality management software solution designed to streamline and optimize QC processes. Leveraging quality management technology saves time and resources, providing peace of mind for financial institutions as they exceed the expectations of members and regulators alike.

ACES FLEXIBLY AUDIT TECHNOLOGY

Thrive Mortgage streamlines QC audits and creates transparency with ACES Quality Management

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About ACES Quality Management

ACES Quality Management is the leading provider of enterprise quality management software for the financial services industry. The nation’s most prominent lenders, servicers and financial institutions rely on ACES Quality Management & Control Software® to improve audit throughput and quality while controlling costs, including:

TOP

60%

8 50

Loan Servicers

TOP TOP TOP

3

10 OF THE OF THE OF THE OF THE

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Unlike other quality management platforms, only ACES delivers Flexible Audit Technology, which gives financial institutions the ability to easily manage and configure ACES to meet their specific business needs without having to rely on IT or other outside resources. Using a customer-centric approach, ACES clients get responsive support and access to our industry experts to maximize their investment.