In speaking to an outside consultant he stated that loan officers should not be able to approve their own exceptions to loan policy and that it should be a next level approval. He stated that by allowing an officer to approve their own, it is basically like not having a policy at all.

Just wondering what other banks out there are doing. Do you allow this?

I tend to agree with him, struggling how to write it up.

No, we do not allow it. Next level approval is required for exceptions.

Same as bigfish. I also agree with your consultant.

It is the equivalent of allowing a teller to OK giving out $5 bills for $1 bills because you ran out of $1 bills. Exceptions of any sort always need an approval at a higher level no matter what area of the bank you are talking about.