Compensation and Market trends Interim reports 2015 - Compliance

Barclay Simpson Market report - complianceStable government positive for recruitment

Against expectations, post election the UK not only has a government, but a stable one. This is a positive development for those looking to participate in the compliance recruitment market. Another positive is a growing and increasingly profitable financial services sector. However, the cost of regulation is a major concern to the industry and one that has the potential to damage its international competitiveness.

Election a watershed moment?

The election does in this respect potentially mark a watershed moment for corporate governance within the financial services industry. The governments Fair and Effective Markets Review (possibly in recognition that “bank bashing” had gone too far) is a mix of rigorous rules and sanctions concerning the accountability of senior bank executives, together with a collaborative code of conduct that will be overseen by a panel of market practitioners. Banks now need to properly manage their businesses, aware that the chancellor has spoken of a new settlement to end the cycle of fines, regulation and taxes. A further proposal, and one that will interest corporate governance practitioners, is that rules on individual responsibility should extend to the wider industry and include asset managers, brokers and hedge funds. Managers will potentially be fined or banned should failings result from the absence of proper controls. Clearly none of this is bad for corporate governance and the personal exposure of management will ensure that compliance recruitment budgets are properly funded.

Demand for compliance continues

At the start of the year 87% of compliance departments anticipated they would need to recruit in 2015. Unlike other areas of corporate governance there is little doubt that demand for compliance expertise is still rising. There are two elements to this demand. First, new positions are still being regularly created, increasing the total number of compliance professionals employed. Secondly, compliance professionals are still changing job at a rate higher than usual. In fact 35% of respondents to our survey reported they had changed job in the last 12 months.

No unrestrained boom in salaries

Does this make for a boom in the salaries and compensation paid to compliance professionals? In spite of media headlines that might report otherwise, both our day to day experience and the results of our employment survey suggest otherwise. Although there are pockets where salary pressures are acute, they are by no means universal.

The average salary increase achieved by compliance professionals staying with their employer has risen from 7.7% to 8.3% in 2015 and for those changing job from 20% to 21%. These may well seem generous given that increases in real earnings have only recently turned positive in the wider economy. However, in terms of historic averages in compliance and when compared to other areas of corporate governance, the figures are not exceptionally high. A quick reality check would reveal that 50% of compliance professionals received a salary increase of under 5%, of which 15% received no increase at all. A further 15% received the same or less when they changed job. Bonuses and other benefits that contribute to overall compensation are broadly flat.

Satisfaction with compensation rising

Perhaps compliance professionals should not want to appear ungrateful for their relative good fortune. A trend in compliance, generally shared amongst all areas of corporate governance, is that increasing numbers of compliance professionals believe they are adequately compensated. The percentage reporting they are satisfied has risen from 55% in 2013 to 60% in our latest survey.


Vacancies still increasingBarclay Simpson Market report graph

The number of vacancies being generated in compliance is still increasing. One reason is simply the creation of new positions. Growth areas such as consumer credit and payments provide new opportunities for those working in compliance as well as regulatory engagement, regulatory affairs / developments and policy roles. These roles reflect the way many companies are taking a longer term strategic view of their compliance functions and how they interact with the regulator. A second reason, and perhaps the reason why 35% of respondents to our survey have changed job is that after the Euro crisis in 2011, many compliance professionals who would otherwise have changed employer, thereby creating vacancies, did not. Once confidence returned in late 2013 a period of catch up began which is still continuing. This process will ultimately slow as in other areas of corporate governance.

There are currently high levels of competition for in-demand compliance professionals. Compliance is now benefiting from the recruitment of graduates and the establishment of compliance training programmes that have been developed over the last 2-3 years. Evidence for this from our survey is explicit with 17% of respondents reporting they had worked in compliance for less than two years against only 7% in 2014.

Rate of placements

Companies actively recruiting

To provide a better insight into the dynamics of the compliance recruitment market, this graph plots the rate at which placements have been made across the last four years.

The graph demonstrates the rate at which vacancies are being filled.

We reported at the start of the year that the rate of placements, having risen steadily for the last two years was continuing to rise. In the first six months of 2015 nothing has changed. It remains imperative for someBarclay Simpson Market report graph 2.1 companies to recruit and many are taking a realistic approach. If candidates with their preferred suite of skills are not available, they need to decide which skills they are prepared to negotiate on. If they are not prepared to do so then they need either to pay a higher salary or continue with an unfilled vacancy. Companies most likely to be successful are those prepared to be flexible, who adopt line management led recruitment processes, who are able to move quickly with minimal ‘touch points’ and are then able to swiftly make realistic offers. Often smaller, more entrepreneurial companies have greater success with these steps avoiding the sometimes slow, unresponsive recruitment processes of some larger companies. However, in spite of reports to the contrary, many compliance professionals, having worked in environments where costs have been aggressively managed and salaries kept in check, enter the recruitment market with realistic expectations.

Costs of regulation grow

The financial crisis was a once in a lifetime event and “never again” was the common refrain. The banks, having engaged in reckless risk taking in the run up to the financial crisis and having been bailed out at staggering cost, were discovered to have subsequently engaged in market rigging and customer abuse, resulting in further scandal and fines. The regulatory costs of cleaning up the banks and making the wider industry fit for purpose has largely fallen to the individual companies in the industry. Legislators and regulators have produced whole rafts of rules and regulations which, given the level of fines, are being rigorously enforced.

Regulation hits productivity?

If a criticism of the UK has been its lack of productivity then the financial services industry would be a good place to look for improvements. One of the major challenges is competitiveness and London has possibly slipped as a global financial centre. The huge waves of reforms and regulation have forced banks and companies in other sectors to weigh the increased costs of doing business. For some it is simply too high. Compliance professionals come at some cost and whilst their numbers are still rising, at some point it must stop. However, just as the huge swathes of conduct and regulatory rules are bedding in, prudential rules are likely to grow in significance.

A positive is that the new government appears to appreciate how vital the financial services industry is to the UK economy. The Fair and Effective Markets Review hopefully sets the scene for a more collaborative approach to regulation.

Relocation an answer?

One source of potential cost saving is to relocate compliance teams to lower cost centres outside of London. The ‘challenger banks’ are particularly well represented in the regions. Longer term this would be positive for the wider economy, spreading the talent pool more widely. In the short term it is creating problems as companies look to recruit in regions of the country, where the concentration of expertise required simply does not exist.

However, the Central Belt in Scotland, the North West, West Yorkshire and the West all have well established financial services industries. The comments section of our survey allowed a number of compliance professionals working in the regions to voice their concerns about the lack of opportunities. A chicken and egg situation perhaps?

Candidate availability improves

Whilst demand is increasing so is the availability of candidates. Immediately after the financial crisis graduate recruitment was curtailed which had up until recently resulted in shortages of candidates in the 2-5 years range of experience.

The good news, born out by our survey, is that industry initiatives to develop compliance as a profession, and one that is attractive to graduates, are bearing fruit. This additional resource is going some way to providing the expertise necessary to meet commercial and regulatory developments. There are now many more talented graduates choosing a career in compliance over and above other specialisms such as legal or audit.

Some Comments

The comments section of our survey identified some interesting and pertinent views worth reporting.

There is clearly some resentment that the responsibilities imposed by CF10/11 positions and the personal liability required is not always being properly recognised or the value and skills required to provide a high quality compliance officer. There is frustration, and it is certainly something we recognise, of the difficulty of moving between sectors. Whilst recruiters are often blamed, they most often are simply reflecting employer preferences.

A perfectly understandable resentment is when unproven compliance professionals are recruited on seemingly higher salaries than resident staff. We are well aware of the problems this can cause.

The ability to work flexibly and have greater control over when they work is clearly important to compliance professionals. There is a sentiment that as compliance professionals become more senior and better compensated, they become more satisfied with their compensation but less satisfied with the broader demands their position makes upon them.


This section covers retail, corporate, commercial and wholesale banking.

Demand from the banking sector remains robust. Growth areas currently include digital banking, payment services and consumer lending. Conduct specialists are continuing to move into the wholesale side to focus on the wider conduct of employees and how this affects customer outcomes.

As banks take a more strategic approach to compliance and regulation, there is greater focus on analysing regulatory developments and overall engagement. This is playing a key part in their strategy to deal with the avalanche of regulatory pressures they face. Larger international banks are putting in place global teams to coordinate their regulatory response to the jurisdictions they operate in. Effectively they are seeking a common standard and then tailoring their approach to meet the demands of specific jurisdictions. This is perceived as an efficient and cost effective approach.

Challenger banks are steadily growing their teams. These roles are often attractive propositions offering high salaries and less hierarchical management structures. International banks operating in London but based in jurisdictions with lower standards of regulatory scrutiny have been scrabbling to meet the standards required in the UK and have recruited a number of CF10 positions.

Financial crime as a discipline is continuing to grow. It is most recently being driven by a change of approach by the FCA in their annual business plan released in March 2015. A notable observation of the plan is that financial crime replaced house price growth as a top risk consideration. Additionally, the FCA has placed a special focus on combating money laundering, bribery and corruption.

The pattern of operational risk candidates migrating into financial crime focused positions, particularly into hybrid financial crime risk framework related positons, is continuing. AML transaction monitoring candidates remain in high demand, particularly those with strong system and process improvement skills. As financial crime advisory functions continue to grow candidates with strong technical knowledge, excellent stakeholder management skills and recent global experience are in particularly high demand. Sanctions remain a key area within financial crime as a result of their increasing use, especially by the European Union towards Russia. As a consequence, there has been an increase in regulation and further high profile fines. Most financial crime functions remain in London, although we are starting to see a number of Tier 1 banks looking to move their functions away from London and into regional centres.


This section covers asset management, wealth management, private equity and hedge funds.

Demand in the sector remains strong. Investment management companies now recognise the need to recruit effective compliance professionals and specifically those who possess the necessary combination of academics, soft skills and technical experience who can help engender the right compliance culture within a company. They want candidates who understand that compliance should be solutions based.

There is recognition within the sector of the need to mimic banks by taking a longer term strategic approach to compliance. Companies in the sector understand that regulation has become globalised and they require compliance professionals with experience of international regulation and specifically the SEC. Asset managers with a global reach but who do not have the resources of larger multi-national companies are looking to their compliance functions to advise on regulation across different jurisdictions. Some are seeking to gain an advantage by employing technology. Compliance professionals that can advise the business and employ automated compliance systems to more effectively meet regulatory obligations are expected to be in demand moving forward. It is something compliance professionals should recognise and embrace across all sectors.

MiFID II is continuing to create challenges as companies review their costs and methods of product distribution. Companies have become sensitive given their cost disclosure requirements. They need robust systems and controls to ensure they meet their stringent regulatory requirements particularly regarding distribution networks and the suitability of the advice they provided. Much of the demand for compliance professionals is coming from larger companies who are better able to absorb the costs of compliance. Smaller and medium sized groups often recruit more tentatively, although they are often more appealing to work for given their generally higher salaries and the greater diversity of experience they are able to offer.

Barriers into the sector remain high and frustrating for those compliance professionals without the required experience.


Within the markets sector, surveillance candidates are in great demand and can currently command a premium. Product specific experience sought includes FX, FICC and equities. At senior levels experience of front office activities is invaluable.

There are still questions surrounding MIFID II and its effects on the brokerage sector. However, as a result of the additional requirements around trade transparency it is likely that new software and IT skills will need to be developed. As IT and compliance functions start to work more closely together, new hybrid roles are likely to emerge.

The cost of regulation is having a substantial impact on the sector leading smaller brokerages to review their businesses. Decisions are being taken on which areas to focus on and which to either close or divest. This is affecting compliance teams, especially in Advisory and Trade Surveillance that directly support the trading desks. Compliance functions are also being merged and divided which is causing uncertainty amongst the affected compliance departments. However, as traditional brokerage companies look to diversify their offering, compliance teams are being established to support the new lines of business.

Some businesses that have not previously been regulated are now establishing compliance functions. Examples include proprietary trading companies. Their preference is usually for compliance professionals with entrepreneurial flair and strong commercial awareness who can ensure that regulation works with rather than against the business.


Many insurance companies grew their compliance functions in 2014 as they migrated towards the three lines of defence model common in banks. Larger insurers are moving towards a business partnering approach, with compliance advisory teams providing underwriters with first hand advice.

As the sector is subject to the senior managers regime, there has been interest in candidates with operational underwriting or broking experience for compliance monitoring roles. Retail insurance companies have looked to recruit consumer credit compliance experts as they fall under the consumer lending regulation implemented by the FCA.

Insurance as with the investment sector, remains a challenge for compliance professionals without prior sector experience to break into.


Our survey suggests a generally positive picture, although in our experience demand for compliance contractors has been more subdued in 2015 than we anticipated, particularly given the strong second half of 2014. The market so far this year has been characterised by a steady stream of opportunities with pockets of strong demand for certain skill sets.

Investment management has continued to utilise contractors and candidates with AIFMD and UCITs knowledge have been of most interest. MiFID is starting to impact compliance advisory requirements, with companies seeking contractors who can assist with assessing potential policy and procedural changes arising from the updated Directive. We expect to see more positions like this, with candidates familiar with both MiFID and its requirements having multiple options.

The retail banks have also been active, with demand for more experienced contractors to help with conduct risk and regulatory change, such as the ongoing implementation of the European Mortgage Credit Directive (EMCD). The corporate and investment banks have also recruited numerous junior-mid level AML/ KYC contractors, where large teams and above average staff turnover are driving contractor demand.

Only 16% of respondents to our survey were not working, although they are more likely to report they are finding securing another contract more difficult than they anticipated. However, the vast majority of those in work had found their current contract within less than three months. Only 18% of contractors working had accepted a reduction in their previous rate, 80% expressed satisfaction with their current rate and over 93% overall satisfaction with their contract.

This Mid-Year Report includes a significantly expanded section on salaries and compensation, designed to give a much fuller picture of overall remuneration packages.

Most compliance professionals are keen to know their market worth. This is not always easy to address. Two otherwise similar compliance professionals may enter the recruitment market and accept materially different salaries. We provide this caveat because we are aware that the compliance recruitment market is sufficiently diverse that it defies simple categorisation. However, compliance professionals and their employers want guidance and this is what we attempt to provide.

As recruitment consultants, we are involved in the negotiations that take place between employers and prospective employees. We are aware that whilst salary is usually the most  important consideration, a number of other factors go to make up total remuneration. In addition to the data we gather from the placements we make and the recruitment work we do, including contact with compliance and human resources  departments about salaries and other benefits, we have also conducted a Compensation Survey to provide specific detail on all different types of emuneration within compliance.

The Survey was of compliance professionals registered with Barclay Simpson and was conducted in June 2015. It generated several hundred responses.

To read the full report, follow the link here.




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