diff --git a/moto/awslambda/responses.py b/moto/awslambda/responses.py
index 83a1cefca..96d20444f 100644
--- a/moto/awslambda/responses.py
+++ b/moto/awslambda/responses.py
@@ -117,6 +117,7 @@ class LambdaResponse(BaseResponse):
             raise ValueError("Cannot handle {0} request".format(request.method))
 
     def policy(self, request, full_url, headers):
+        self.setup_class(request, full_url, headers)
         if request.method == 'GET':
             return self._get_policy(request, full_url, headers)
         if request.method == 'POST':
@@ -140,7 +141,7 @@ class LambdaResponse(BaseResponse):
         path = request.path if hasattr(request, 'path') else path_url(request.url)
         function_name = path.split('/')[-2]
         if self.lambda_backend.get_function(function_name):
-            policy = request.body.decode('utf8')
+            policy = self.body
             self.lambda_backend.add_policy(function_name, policy)
             return 200, {}, json.dumps(dict(Statement=policy))
         else:
diff --git a/tests/test_awslambda/test_lambda.py b/tests/test_awslambda/test_lambda.py
index d57722074..3ff225e48 100644
--- a/tests/test_awslambda/test_lambda.py
+++ b/tests/test_awslambda/test_lambda.py
@@ -769,10 +769,10 @@ def test_get_function_created_with_zipfile():
 
 
 @mock_lambda
-def add_function_permission():
+def test_add_function_permission():
     conn = boto3.client('lambda', 'us-west-2')
     zip_content = get_test_zip_file1()
-    result = conn.create_function(
+    conn.create_function(
         FunctionName='testFunction',
         Runtime='python2.7',
         Role='test-iam-role',
@@ -796,16 +796,16 @@ def add_function_permission():
         EventSourceToken='blah',
         Qualifier='2'
     )
-    assert 'Statement' in response
-    res = json.loads(response['Statement'])
-    assert res['Action'] == "lambda:InvokeFunction"
+    assert u'Statement' in response
+    res = json.loads(response[u'Statement'])
+    assert res[u'Action'] == u'lambda:InvokeFunction'
 
 
 @mock_lambda
-def get_function_policy():
+def test_get_function_policy():
     conn = boto3.client('lambda', 'us-west-2')
     zip_content = get_test_zip_file1()
-    result = conn.create_function(
+    conn.create_function(
         FunctionName='testFunction',
         Runtime='python2.7',
         Role='test-iam-role',
@@ -834,10 +834,9 @@ def get_function_policy():
         FunctionName='testFunction'
     )
 
-    assert 'Policy' in response
-    assert isinstance(response['Policy'], str)
-    res = json.loads(response['Policy'])
-    assert res['Statement'][0]['Action'] == 'lambda:InvokeFunction'
+    assert u'Policy' in response
+    res = json.loads(response[u'Policy'])
+    assert res[u'Statement'][0][u'Action'] == u'lambda:InvokeFunction'
 
 
 @mock_lambda