Why highly regulated businesses produce such dreadful Board papers

There is a popular belief in regulated businesses that dreadful Board papers are inevitable.

This is nonsense.

Regulation undoubtedly creates complexity. It generates rules, reporting obligations, committees, attestations, frameworks, controls, second lines, third parties, annual assessments and a great many people who feel obliged to add a paragraph. But regulation does not, of itself, require papers that are unreadable, shapeless or so laden with caveats that the point dies somewhere around page 17. The regulators themselves generally ask for the opposite: information that is clear, timely, targeted and useful for effective oversight and challenge.

So why are so many Board papers in highly regulated businesses such a trial?

Because they are usually being asked to do too many jobs at once.

A Board paper in a bank, insurer, mutual, asset manager or other heavily regulated business is rarely written simply to help the Board make a decision. It is also expected to reassure Compliance, satisfy Legal, keep Risk content, protect the executive sponsor, provide an audit trail, anticipate future challenge from Internal Audit, and survive the possibility that one day a regulator, investigator or litigator may read it with hostile interest.

This is an ambitious brief for any document. It is also how papers become bloated.

What begins as a decision paper gradually turns into a hybrid object: part recommendation, part encyclopaedia, part insurance policy. Everyone adds something. Nobody removes anything. The resulting pack is sent to directors in the hope that they will somehow locate, within an acre of prose, the actual point.

The Board, naturally enough, would prefer to know four things.

• What is the issue?
• Why does it matter?
• What are the real risks or trade-offs?
• What, precisely, are we being asked to decide?

In a well-run business, those four questions appear near the beginning. In a badly run one, they are scattered through the paper like clues in a detective novel.

The difficulty is not merely aesthetic. It is a governance problem.

Boards are there to exercise judgement. They are meant to challenge, oversee and decide. The longer and less focused the paper, the harder that job becomes. Directors spend their time decoding management’s meaning rather than examining management’s argument. A meeting that ought to be about judgement becomes an exercise in document recovery.

That matters in any business. In a regulated one it matters even more.

The FRC’s guidance to the 2024 UK Corporate Governance Code is built around the idea of effective governance supporting better decision-making and stewardship. The PRA, in its supervisory statement on outsourcing and third-party risk management, says Board information should be clear, consistent, robust, timely and well-targeted, with an appropriate level of technical detail to support effective oversight and challenge. The FCA’s review of firms’ first annual Consumer Duty Board reports similarly found room for improvement in how firms presented and evidenced their assessments. Different regulator; same underlying message: if the Board is to discharge its responsibilities properly, the information has to work.

The company secretary, meanwhile, often sits at the unhappy centre of all this.

He or she is expected to uphold governance standards, keep the timetable moving, maintain the quality of the pack, protect the Board’s time and, somehow, do so without upsetting powerful executives who have submitted dense, overgrown drafts at the eleventh hour. It is one of those corporate roles that combines constitutional significance with the day-to-day practicalities of document wrangling. When Board papers are poor, the company secretary usually sees the problem first and gets blamed last.

Chairmen have a related problem.

Most Chairmen know when papers are bad. They can see that the material is too long, too late, too technical or too evasive. What they often lack is a practical mechanism for improving it without sounding like they are asking management to simplify serious matters for the benefit of the slow readers at the back.

But clarity is not simplification in the pejorative sense. Clarity is disciplined thinking made visible.

A good Board paper does not remove complexity. It orders it. It tells the Board what matters now, what sits in the background, where the real judgement lies and what the consequences of each option might be. It distinguishes between the decision and the supporting evidence. It puts the crucial argument near the front and the worthy debris at the back, where appendices were invented to live.

That is particularly important in today’s regulated environment.

Consider the modern reporting load. Consumer Duty requires Boards to review and approve an annual assessment of whether the firm is delivering good outcomes for retail customers. Operational resilience and outsourcing oversight bring their own flow of Board-level reporting and challenge. The quantity of material can be substantial. Yet in each case the essential Board task remains the same: to understand, interrogate and decide. The answer, therefore, is not endless accumulation. It is better filtration.

The best highly regulated businesses understand this.

They do not confuse volume with seriousness. They do not assume that because a subject is technical, the paper must be obscure. They do not allow every stakeholder to smuggle a small essay into the main body. And they do not make non-executives wade through appendices to discover what management is recommending.

Instead, they impose a few simple disciplines.

• The purpose of the paper is explicit.
• The decision required is stated early.
• The principal risks and trade-offs are plain.
• The supporting evidence is summarised, not dumped.
• The appendices support the argument rather than replace it.
• And somebody, somewhere, has the authority to say: this may be accurate, but it is still unreadable.

That last point matters more than people admit.

Poor Board papers are rarely the result of stupidity. More often they are the result of weak editorial authority. Too many contributors, too little ownership, too much caution, too little pruning. The organisation has plenty of intelligence, but not enough compression.

In truth, most dreadful Board papers are not written. They are accumulated.

That is why improving them is not just a matter of style. It is a matter of governance discipline. Somebody has to decide that the purpose of a Board paper is to help the Board do its job, not to provide a resting place for every thought the organisation has had since the previous meeting.

Highly regulated businesses will never have tiny Board packs. Nor should they. Their responsibilities are serious and their operating environments are demanding.

But they can have better ones.

They can have papers that are shorter without being simplistic, fuller without being sprawling, and more rigorous because they are clearer, not despite it.

That is the real point.

The problem with many Board papers in regulated businesses is not regulation itself. It is what organisations do in the name of regulation.

And that, mercifully, can be fixed.