How to Structure a Board Paper Proposing Closure of a Legacy Product Book

Closing a legacy book is rarely a clean commercial decision. By the time it reaches the board, there is usually a tail of customer harm, operational fragility, or product features that no longer sit comfortably with current conduct standards. The paper has to do two jobs at once: justify the closure on its merits, and demonstrate that customer outcomes have been thought through properly, not retrofitted to support a decision already taken.

Key Executive Takeaways

• The paper must lead with customer outcomes and conduct analysis, not commercial rationale, or it will read as a cost decision dressed up in fair value language.
• Closure mechanics (run-off, transfer, buy-out, forced migration) each carry different conduct risks and remediation tails, and the paper must show why the chosen route is best for customers in the cohort, not just cleanest for the firm.
• Legacy conduct issues already identified should be surfaced in the paper itself, with remediation treated as a parallel workstream, not something closure is expected to resolve.

Lead with the conduct question, not the commercial one

Boards are used to closure papers that open with declining margins, system costs, and strategic fit. When conduct is in play, that order has to invert. Open with what the book looks like from the customer's perspective: who holds the product, what they were sold, what they currently receive, where the outcomes have drifted from original expectations, and what the firm now knows about historical sales practice or product design that it did not know then.

This matters because the board's first question, and the regulator's first question if the decision is later scrutinised, will be whether closure is being proposed to resolve a customer problem or to retire one from the balance sheet. The paper has to answer that cleanly.

Separate the three decisions the board is actually making

Most closure papers conflate decisions that should be considered separately:

1. Should the book be closed to new business, or run off, or actively exited?
2. What happens to existing customers, and on what timeline?
3. How are known or suspected conduct issues in the back book addressed, independent of closure?

Treating these as one decision produces muddled recommendations and gives the board no real choice. Structure the paper so each is considered on its merits, with the interdependencies made explicit. The board should be able to approve the closure direction while still challenging the customer treatment approach or the remediation scope.

Be specific about the exit mechanics

Run-off, Part VII transfer, portfolio sale, buy-out offers, and migration to a replacement product all carry different conduct profiles. A sale may deliver a clean commercial exit but transfer vulnerable customers to a counterparty with weaker servicing. A migration may look customer-friendly but strip features the original cohort valued. Run-off preserves contractual rights but leaves the firm managing a shrinking, expensive book with weakening controls for years.

Set out each option, the customer cohorts affected, and the specific conduct trade-offs. Name the option that is best for customers and explain honestly where it differs from the option that is best commercially. If they are the same, say so and show your working.

Surface the legacy conduct issues directly

If there are known mis-selling patterns, product design flaws, fair value concerns, or vulnerable customer concentrations in the book, put them in the paper. Do not let the board approve a closure without visibility of what it is closing. Treat remediation as a committed, funded workstream with its own governance, not a consequence that will be managed through the closure programme.

This is where papers most often fail. Closure gets approved, remediation gets scoped later, and the two timelines collide, usually when a complaint spike or a supervisory query forces the issue.

Set out supervisory engagement explicitly

The paper should state what the relevant regulators have been told, what they have asked, and what the engagement plan is through the closure period. If notification obligations under Principle 11 or SUP 15 are engaged, say so. The board needs to approve a position it can stand behind in a supervisory conversation the next day.

The decision point

Before the paper goes to the board, ask one question: if a supervisor read this cover to cover in six months, would they conclude the firm made a considered decision about customers, or a commercial decision with customer language layered on top? If the answer is not clearly the former, the paper is not ready.

Frequently Asked Questions

How much detail on individual customer cohorts belongs in the board paper itself?

Enough that the board can see the shape of the affected population: size, product variants, vulnerability indicators, length of tenure, and any cohorts with distinctive outcomes. Detailed segmentation sits in an annex, but headline cohort analysis belongs in the body.

Should the paper quantify potential redress exposure?

Yes, with ranges and clear assumptions. Omitting it to protect the paper from discovery concerns is a mistake. Boards cannot approve a closure without understanding the financial tail, and auditors and supervisors will expect to see the analysis.

Who should sponsor the paper?

Joint sponsorship by the business owner and the Chief Risk Officer or Chief Conduct Officer is usually right. A paper sponsored only by the business reads as commercially driven. A paper sponsored only by risk reads as defensive. Joint ownership forces the trade-offs to be resolved before the board sees it.

What is the right role for the audit committee or risk committee before board approval?

The risk committee should review the conduct analysis and remediation approach substantively, not as a formality. If the risk committee has not challenged the paper, the board has no independent assurance that the customer analysis holds up.