Compliance culture takes over the city

Tim Wallace
Follow Tim
PAY in compliance and risk jobs is soaring thanks to the wave of regulation sweeping the financial services industry, while other City workers see mass layoffs and salary cuts.

New research from recruiters Robert Half, given exclusively to City A.M., shows high demand for experts in audit, compliance and risk management is driving wages through the roof.

Banks, insurers and investment groups are all being forced to hire increasing numbers of staff to deal with incoming rules – the latest figures from headhunters Morgan McKinley estimated that demand for compliance staff was the biggest factor behind the 11 per cent rise in City vacancies last month.

And Robert Half’s study showed rising headcount is the largest additional cost for 62 per cent of compliance departments this year.

Those increases stand in stark contrast to the picture in other parts of the financial services industry. The City has lost more than 100,000 jobs since the start of the financial crisis, according to the Centre for Economics and Business Research, with thousands more expected to go in the next year.

Bank compliance managers are set for the biggest jump in pay across the City – they are in line for an average rise of 7.1 per cent taking salaries to up to £100,000. Their teams are in line for similar increases across the board, according to Robert Half’s 2013 financial services salary guide.

Spending on technology to match the tougher regulatory environment has also increased – managers in audit, compliance and risk IT systems are also in line for pay rises of an average of 5.4 per cent, potentially taking their pay above the £100,000 mark into 2013.

By contrast top level financiers are seeing pay levels frozen or even coming down – the average finance director will see their salary fall 2.4 per cent to £105,000-£190,000, while banks’ operations directors are seeing pay stagnate at £70,000-£130,000.

And staff in other areas away from risk, from cash management to trade finance to analysis are all seeing rises barely in line with inflation. And tech support in traditional areas like trading floor activities are seeing their pay fall by 1.7 per cent.

“The unstoppable rise of new regulation in the UK financial services marketplace is driving significant growth of new roles – and signals a warning for what might be a more significant challenge in the future, particularly in regulation, risk and compliance,” said Robert Half’s report.

“Regulatory change remains top of mind for the financial services sector as companies strive to generate profits as well as achieve compliance with regulation ranging from Solvency II to Basel III and from International Financial Reporting Standards (IFRS) to the Foreign Account Tax Compliance Act (FATCA).”