The conversation around deregulation has returned with new intensity. Across regulated sectors, policymakers are acknowledging what organizations have long experienced: the rulebook has grown heavy. Requirements have accumulated over the past decade, sometimes faster than teams can absorb, creating layers of expectations, reporting demands and governance responsibilities that stretch across departments.
Now, regulators are beginning to simplify. They are removing duplication, streamlining reporting, and revisiting administrative burdens. Words like deregulation and simplification, once carefully avoided, now appear openly in regulatory agendas. The intention is not to weaken oversight but to make frameworks clearer and easier to navigate.
When “fewer rules” doesn’t mean less work
This turn towards simplification might sound like a welcome development. And in many ways, it is. But the growing use of terms like deregulation and simplification in policymaking carries an important nuance: fewer rules do not automatically reduce the workload for organizations. Supervisory bodies acknowledge that while the rulebook may become lighter, the responsibility placed on firms often becomes heavier.
What looks like relief on paper can translate into more interpretation, more internal coordination, and more accountability in practice.
This is the deregulation trap.
When a system loses its memory
To understand why, imagine a library that has stopped tracking its books. A book is returned but still marked as borrowed. A reservation slip disappears. Staff retrace their steps, trying to recall who handled what. Nothing looks broken from the outside, yet everything becomes slower and more difficult.
Many organizations experience regulatory change in exactly this way. The issue is rarely awareness, it’s the pace and volume of updates layered onto processes that are fragmented by default. Interpretations live in emails and chat threads. Ownership shifts from team to team depending on the topic. Links between obligations, controls, and evidence sit across different systems, often maintained manually.
A leaner rulebook doesn’t reduce this fragility. It brings it to the surface. When external regulations provide fewer prescriptive details, internal clarity becomes non-negotiable. Teams must align interpretations, assign responsibilities, and document decisions with far more discipline than before. Without this structure, organizations risk losing track of what a requirement means, how it should be implemented, and whether it is actually being met.
Why traditional governance isn’t enough
Governance frameworks are designed to bring order, consistency, and accountability. They provide essential structure, but they don’t remove the day-to-day friction that determines whether compliance actually works.
A new requirement often moves between teams like a hot potato: Compliance interprets it, Legal adjusts the language, Operations assesses the impact, and IT considers how to implement it. Everyone contributes, yet no single owner holds the full thread. Decisions scatter across inboxes. Interpretations drift. Evidence materializes only after the fact.
Deregulation intensifies this friction. When regulators reduce detail, organizations must create clarity themselves. Streamlined reporting means stronger proof is expected, not less. And when rules shift from prescriptive instructions to outcome-based expectations, internal judgments become far more visible to auditors and supervisors.
The idea of deregulation implies simplicity. In practice, expectations move in the opposite direction, becoming sharper, not softer.
The real impact of deregulation
Deregulation does not remove responsibility; it shifts it inward.
A simplified rulebook requires organizations to define the details regulators no longer prescribe. This means clearer interpretations, stronger internal alignment, and more reliable links between requirements, processes, and controls. Evidence can’t be reconstructed at the end of a cycle. It must be captured as work happens. And ownership cannot be implied; it must be explicit.
In other words, the more regulators remove complexity on the outside, the more structure organizations must build on the inside.
This is the essence of the deregulation trap: leaner frameworks create the impression of reduced burden, while in reality they increase the need for internal discipline.
Creating order in a leaner regulatory world
Navigating this shift safely requires strengthening the operational backbone that supports regulatory change. Fragmented, manual processes cannot withstand an environment where fewer rules demand more interpretation. Disconnected systems cannot provide the visibility needed when expectations are clearer but less detailed.
A connected approach, one that links obligations to policies, controls, and evidence, transforms compliance from a reactive task into a predictable, traceable process. It keeps interpretations consistent, clarifies ownership, and ensures decisions leave a lasting, auditable trail.
This foundation also enables innovation. As digital services, automation, and AI evolve rapidly, organizations need stability that can keep pace with both regulatory shifts and customer expectations.
The library metaphor makes the risk clear. A library can operate without tracking its books, but only with rising friction and uncertainty. Over time, gaps widen, confidence erodes, and the system struggles to cope with change. The same is true for organizations facing deregulation. In a world shaped by leaner rules and faster updates, operating with fragmented memory is no longer just inefficient. It becomes a genuine risk.
