INTRODUCTION
Compliance has notoriously become a ‘problem child’ of the recruitment space in recent quarters. A chronic candidate shortage and record demand have pushed this area more than before. Organisations have been pushed to take on staff with inflated salaries as strong candidates have been whisked off the market in a matter of days. On the temp side, processes are either lasting days because the correct candidate has been identified or months because of slow processes and candidates being lost. This is very much being mirrored on the perm side where speeds have been breaking records and at times it has looked like a temp market.
Clients are currently re-assessing what they are looking for in a candidate to fulfil the requirements they have. As cliché as it may be, the above demonstrates that this is a true candidate-driven market. It is worth reiterating that this does not mean that a simple salary increase will solve problems, there are a variety of factors that candidates are looking at when considering roles. These are factors that have been considerations for perm employees for several years now but are now in the minds of contractors.
Linked to the above is flexibility from hiring managers that have not been seen before when it comes to taking on contractors. As there is often an immediate need for headcount in teams due to volume demands – taken on new clients, incumbent team members leaving etc, it is often the case that managers are having to accept that the ideal background isn’t necessarily in the market in that instance. Historically, hiring managers have been in positions whereby they can find candidates with the most aligned profiles with the vacancy. However, due to this being a candidate short market, especially on the contract side of things, this hasn’t been possible on several occasions.
Therefore increasingly, after a role has been out for a while, hiring managers are opting to go for candidates that come from different backgrounds, but that they could train to fulfil the role. Where firms are having success with this, is coming to this realisation sooner and identifying profiles that have the necessary transferable skills and making a decision on them – slightly different product/system experiences as examples. One can see that frequently, profiles have been put on hold and then reconsidered in future, but the candidate is then off the market.
With the doom and gloom aside, there are some positives. We are seeing more organisations who are willing to invest time into training junior/ grad level candidates into roles with greater responsibility. This is an excellent opportunity to future-proof the function, however, it is important to note that, due to hiring freezes in 2020/2021, one of the biggest gaps we are seeing is in candidates with 1-2 years of experience within the compliance space thus considering recent grads, or more experienced analysts in the 3-5 year space would be the more appropriate option
ROLE PROFILES
Financial Crime
Q3 saw organisations bolstering the 1st line with candidates with experience in a checking role on a contract basis highly sought after. This is one area where there is not a significant candidate shortage due to remediation project-style work. This is, however, an area we work with to identify candidates of the highest quality. This is essential for organisations as we have seen various regulatory bodies (FCA, SEC etc) who have taken a particular interest in the work of these candidates with them acting as a gatekeeper to wider implications for the business.
Q3 also saw a bit of a slowdown in the onboarding of sanctions candidates that we saw in the back end of Q2. This is likely a result of the sanctions space being relatively stable since the influx of sanctions earlier this year. We may see organisations looking to review the sanctions framework which enforces these across the business. We stand ready to backfill positions in this space as organisations look to take BAU staff from across the team to take on this sanctions framework reform.
We have been seeing the start of a bolstering of transaction monitoring teams in some areas. Clients are seeking candidates with a background in transaction monitoring without the KYC side of things. This is a limited pool of candidates and we have seen success as long as the candidate can interpret the basic swift messages (MT103 and MT202).
Core Compliance
Core compliance is where the bulk of work has come on the temp side in Q3. Guideline coding implementation candidates are again proving to be highly sought after with each candidate that comes onto the market probably having two or three offers to choose from. The wider investment compliance team is also seeing growth across the board. This is a result of staff attrition in this space, the bottleneck into senior positions in this space is much greater than in other areas. There is also a skill shortage in the more technical space across all areas.
Organisations are using generalist compliance candidates as a stop-gap to fill the investment compliance team. The benefits of this are that these candidates have experience across a broad range of tasks. We have seen several candidates taken from very small organisations such as hedge funds, and boutique asset managers. This has its benefits but like any other resource, it has suffered from severe depletion.
We are seeing an increase in the number of fund advisory positions on a temp basis. The rationale behind this is twofold, there are difficulties in finding candidates on a perm basis, and there are also more familiar reasons for temp hires, i.e. parental leave, long-term sick etc. This is proving to be a difficult space as there is a limited number of candidates in this space. We have been working with investment managers who are happy to look at alternative product advisory backgrounds. For example, anyone with an investment banking background. The issues that have been cropping up are pay disparity between the two. Day rates between £600-1000 should be sufficient to attract talent in this space from across the FS industry.
PREDICTIONS
It would appear that there is a delicate tightrope being walked in the markets at the moment. There is uncertainty about the regulation that is coming through as well as the performance of funds. Traditionally we have seen in more hostile markets, temps are an option as they provide assistance on a flexible basis and can be dovetailed with budgets.
IR35
Specific to contracts, we have recently heard about the repeal of the changes made to IR35 regulations made in 2017 and 2021. These changes bring the liability of the tax back to the contractor from the fee payer. We are awaiting full details on what this means, but we are in constant communication with our Clients. As time goes on, we will hopefully be building a picture of how the market is reacting. Do reach out to find out what we are seeing, we are more than happy to talk through this and the implications it will have.
MIFID 2.5, ESG and Greenwashing
Changes to MIFID which were announced last year are set to come into force, this appears to be a part of a suite of ESG-related changes. These are looking to mainstream the consideration of ESG risks and place sustainability concerns at the heart of the financial system. From a staffing perspective, we may see roles with an ESG-specific slant on them and request candidates with a background understanding of the application of ESG-relevant legislation.
It is important to note that due to ESG being recently incorporated on a wide basis, the candidate pool for specialists is very limited. Several candidates have incorporated this work into their current roles but may not explicitly mention it on a CV. These candidates need to meet them to understand their knowledge. Specialist roles within ESG are highly attractive to candidates and can be a good way to attract high-quality candidates if there is an ESG slant on the role.
Financial Promotion Reform
April this year, the FCA announced the reforms coming to financial promotions. This started a bit of a hiring frenzy in the distributions and fin prom area. An area which generalists certainly have but very few specialise as a single role. The emphasis on the importance of tackling mis-selling products will mean that larger companies may create a siloed team in particular if they do go down the route of seeking permission to approve promotions.
This could in some ways release some financial promotions experts as some investors will decide to outsource this to what will undoubtedly be several third-party firms approving promotions on behalf of others.