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by Carolyn Jones
We are not paperless yet and it looks as though we won't be for a long time. Problems with past records seem to plague many banks in the country. I have talked with bank officers who have had retained records since their bank started. Most of the time there is no list of the records in storage and no indication as to when they may be destroyed. It can be a big mess. Some I have talked with cannot afford to keep all these records because of space and especially the law. They run out of room to store them, they have to rent or build extra storage space. If a schedule is followed, there is a turnaround of boxes and space, and you should not need to rent space or build. Following the procedures and schedules in Record Retention Online will help you dispose of the records when you are legally able to do so.
By law, you must have a retention schedule in place, adopted by the Board and used. People have the tendency to think that if you keep it you will be safe from subpoenas, etc. You are not. You must follow the Federal and State Auditors guidelines for record retention. There are consequences from not following the law: stiff fines could be assessed, and you could even be ordered to cease and desist daily practices. It is very important to adopt a schedule and follow it.
If you have a record, you have to produce it. If you retain a record when you should not, you are opening the bank up for unneeded liability plus wasting the banks money because of storage space and the expenses that go along with storing unneeded records. Manpower is another waste of money when the bank has to pay to have records that have no real value retrieved. Following the laws that are in place assures you that you will not have to produce records that are legally not necessary.
There are many records that should not be held longer than five years, yet banks are still retaining them longer. Check Imaging is replacing microfilm in many areas but you still have to deal with the records that are on microfilm. Check the retention schedule to see how long these records need to be retained.
I have contacted the FDIC to see how long you should retain loan files that are paid off. There is no law regarding this and they suggested two years. You have to be careful as foreclosed files, student loans, and HUD have specific retention periods that are mandated.
Some bankers feel it is best "for the customer" to retain records for a long period of time. If a bank's records are subpoenaed, the records or their reproduction, and substantiating records must be supplied. This costly policy could backfire and cause the customer (or the bank) to lose a lawsuit. Avoid the costs, save some money, and subscribe to a record retention service that will keep you updated.
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