Ever-increasing regulation is boosting compliance careers
ADL PARTNERS
FIVE years ago I was working on a compliance mandate for an investment bank. As well as compliance professionals, the client was open to seeing individuals from other professions, in this case legal. Yet to retain the interest of lawyers and stop them from terminating the conversation it was imperative not to mention the word “compliance” in the first instance. Rightly or wrongly, compliance was perceived by some as boring, back office and box ticking.
Not anymore. Although already underway, regulatory change – which gathered pace following the demise of Lehman Brothers – has catapulted the compliance professional into the spotlight. Institutions, both financial and corporate, cannot move for fear of breaching regulations being rolled out in the UK, Europe and US. And as has been witnessed in the last 12 months, the cost of getting it wrong may expose that institution to a political, public and financial backlash on a massive scale. Compliance is here to stay and the role of the compliance professional will be amplified.
Since the financial crisis, it has been imperative that financial services organisations have an effective compliance function. From 2008 and 2009 institutions began to focus on the need for senior and strategic compliance hires to better align and integrate the function with the business as a whole. This resulted in the appointment of heads of different departments, from financial crime to capital markets, as well as global heads of compliance and money laundering reporting officers. At the same time, we saw a closer union between the compliance teams and their respective counterparts in risk and legal. As this trend gathered pace in 2010, competition for senior compliance professionals in the market was fierce, driving up salaries on average by 18 per cent – in many instances total annual compensation eclipsed levels previously seen in legal and risk. All this reflects the rise of the compliance professional away from a purely operational function, a view reiterated by Reza Zaidi, head of compliance UK at GE Capital, who states that the profession has “evolved into a business-partnering role”, whereby it is necessary to “translate current and future regulatory initiatives into what this means for the business in its short/long term objectives”.
The first half of 2011 saw the vast majority of key strategic compliance hires in place. Firms then turned their attention to bringing in additional resources to meet their compliance and regulatory obligations which kept recruitment levels at an all-time high. For the most part, this involved recruiting specialist compliance officers at junior to mid-levels of experience to deal with the raft of new regulations and legislative measures now in play, from the likes of MiFID, Basel and Dodd-Frank. With an increasing need for individuals with regulatory knowledge, firms sought out professionals from other sources within the regulatory arena, such as the financial services authority and law firms. Yet the hive of recruitment activity in early 2011, which again saw salaries rise by 8 per cent, has been stifled by the on-going European crisis and fears of a double dip recession in the UK market, which has impacted on headcount for additional hires.
Looking at this year and beyond, firms in general are concerned with keeping a tight rein on costs across all areas of their business. However, with little abatement in the flow in regulatory legislation combined with ever increasing scrutiny from regulatory bodies, anyone whose business is regulated has little choice but to continue to up-scale their compliance operations. As Imtiaz Khan, head of central compliance at Credit Agricole says: “Compliance officers today are often a one stop shop for advice, monitoring, training and regulatory news which means experience, knowhow and flexibility are key requirements”.
We anticipate continued demand for professionals in monitoring and testing and regulatory compliance, not just within the banking fraternity, but also into asset managers and investment houses. I suspect if I made the same calls as five years ago today, no one would hang-up this time.
James Beale heads the compliance and legal search desk at ADL Partners (assisted by Radhika Chudasama, consultant).