By Jasmine Williams
for the 2024 Risky Women Writing Competition, presented in partnership with Bovill Newgate
How financial policy teams can communicate their value and enhance policymaking through research-driven, collaborative, and continually assessed practices. This article highlights the importance of effective policy development in protecting consumers, fostering stakeholder buy-in, and ensuring relevance in a changing financial landscape. Learn how regulators can support these teams to drive better processes and compliance.
Teams that are responsible for developing financial policy sometimes find it difficult to communicate their value. Their peers seem to think of the policy team as that small group of people who appear to be covertly tucked away in a corner of the building. While most of their coworkers know that work is being done (evidenced by the policy papers and legislation issued), there is seldom an awareness of the significance of that work. In fact, many people do not grasp the true value of the policy team until an issue arises and the team’s help is needed.
The policy team is usually made up of generalists and subject matter experts who work together to solve problems, identify and remove inefficiencies, and make informed recommendations that lead to better processes, policies, and regulation.
Policies that shape financial regulation are directed toward one overarching objective— protecting consumers of financial services. To fulfil this objective, the policy team works to ensure that financial policies are sound and relevant and reflect the current nature of the regulated sectors. Policy development, when done right, helps organisations achieve their goals.
Policy should evolve in tandem with the development of the financial services landscape. It is vital that policymakers continually improve upon the policies that they issue; this is a key element of good policy development.
So, how do we get policy right?
What is good policy?
Good policy is backed by evidence and is evaluated often to ensure that it remains appropriate and relevant.
Research-driven
Policy development should always be based on supporting research. Policymakers should stand ready to answer the question – How did you arrive at this policy position?
Good policy considers all available data before landing a position. Policy should be subject to pre-implementation scrutiny to ensure that the research is understood and that recommendations align with the results of such research.
One potential benefit of research-driven policy is that of increased credibility. Research-driven policies can facilitate stakeholder buy-in. Those impacted by policy decisions may be more inclined to give their support when they can see evidence for the policy position.
Research-driven policy can also prevent burdensome policies that do little to solve the problem. A lack of evidence can lead regulators to implement policies that may be irrelevant or impractical.
Collaboratively crafted
As problem solvers, the policy team is collaborative by nature and is often privy to information from all departments within the organisation. This position allows the policy team to analyse issues on an informed basis.
The policy team often consults with internal and external stakeholders, particularly those who have direct experience or technical expertise about the issue or who may be impacted by the policy. Consultation allows the team to gain insight into risks that may affect the practical implementation of the recommendations.
Policy that is developed alongside the advice and feedback from stakeholders can reduce friction in the implementation stage and reduce the likelihood of unintended or unforeseen consequences. A collaborative approach also demonstrates accountability and transparency in the policy development process which fosters trust and promotes compliance. When stakeholders are involved in the process, they are more likely to comply with new policies.
Continually assessed
It is never enough to simply implement policy and move on to the next task without a plan in place to revisit the policy. Good policy should undergo ongoing monitoring and evaluation. There should be clear answers to the questions— did the policy achieve its objectives and how has the policy worked in practice?
An evaluation plan should be prepared and scheduled during the policy development. Evaluation may be done on a formal or informal basis, depending on the resource availability of the policy team.
Good practice is to implement a feedback-loop so that the policy team can receive and evaluate feedback from stakeholders on a periodic basis. Some regulators issue ‘calls for evidence’ which provide a way for the public to provide feedback. Information received from data calls should be reviewed and recorded to inform future work. Evaluation reports should also be distributed to stakeholders so that they are aware of the regulator’s next steps concerning a policy.
How can regulators support good policy
Since the main objective of policymaking for financial services is to protect consumers, it is important to recognise that financial policy impacts real people. To support this objective, regulators should ensure that their policy teams are well resourced with the right expertise and tools. This means investing in communication tools and data analysis tools to facilitate research, collaboration, and policy evaluation.
Additionally, other teams should be encouraged to make more visits to the policy team. They may just find that it isn’t tucked away at all, but that the policy team is well positioned to facilitate good policy and good regulation.
Mandatory disclaimer: The views and opinions expressed in this article are solely my own and do not reflect the views, opinions, or positions of my employer.