Simpler rules will not mean a lighter file

There is a pattern to how simplification consultations land in advice firms. The headline is read as relief, the detail is left for later, and the practical preparation happens after the final rules arrive, by which point the firms that prepared early have an advantage that is hard to catch up on.

I want to separate two things that often get merged in those conversations: the volume of prescription, and the weight of responsibility. They do not move together, and recent regulatory direction has generally reduced the first while leaving the second exactly where it was.

Why fewer steps can mean more writing

When a rule specifies the steps, following the steps is most of your defence. The file shows the process was applied, and the question of whether the process was the right one for this client sits largely with the rulemaker.

Take the prescription away and that question comes back to the firm. You now choose the approach, and the file has to show why the approach suited this client. That is a smaller process and a larger explanation.

This is why I am cautious when a firm tells me a simplification will save them time. It will save them time if their reasoning is already written down, because they lose steps and keep the record. It will cost them time if their reasoning has been implicit in the steps, because the steps were doing work nobody had to articulate.

What is worth doing before any final rules

First, find out where your current files rely on process rather than reasoning. The test is to read a file and ask whether it explains why, or only shows that a sequence was completed. A file that recites a sequence is fine today and thin under an outcome-led rule.

Second, work out which of your templates encode a specific regulatory step rather than a client need. Those are the ones that will need rewriting, and a firm that knows which they are can plan the work rather than discover it.

Third, and least popular, decide who in the firm is allowed to depart from the standard approach and on what basis. Simplification increases the room for judgement, and room for judgement without a stated boundary is how inconsistency gets into a file set. A one-page note saying who may deviate, and what they must record when they do, is worth more than a rewritten template.

What not to do yet

A consultation is not a rule, and I would not rebuild a process around a proposal that may change in consultation. Nor would I wait for certainty before doing any of the preparation above, because none depends on the final wording. They all involve knowing your own files better, which is useful whatever emerges.

The thing I would avoid entirely is reading simplification as permission to shorten the record. The direction of travel across the last few years has been consistently towards being able to demonstrate outcomes rather than activity, and nothing in a simplification agenda reverses that. If anything, a lighter rulebook raises the value of a firm that can show its working, because there is less prescription to hide behind.

Firms sometimes ask me what the safe position is while the shape is unsettled. The safe position is the same one it has been for a while now. Record the reasoning at the time, in the client file, in language a stranger could follow. That holds under prescriptive rules and under simplified ones, and it is the only preparation that cannot be made obsolete by a change in the final text.

Simplification changes what you must do. It does not change what you must be able to show.