Compliance Market Commentary, Q2 2014

• Article by BRUIN Financial

Compliance Market Commentary, Q2 2014

Market Overview
The first quarter of 2014 saw Compliance functions across London growing significantly, and this trend has continued over the past 3 months. During this time, we have seen continued hiring across both the Investment Management and Banking sectors. With an ongoing regulatory agenda being driven by UK and International bodies, investment in Compliance remains a key focus and we are witnessing the most consistent levels of hiring since 2008.

Investment Banks are continuing to build their Compliance functions in response to ongoing changes to the regulatory landscape which are being driven predominantly by the UK, US and European regulators. Typical EMEA Banking Compliance functions are seeing London play an increasingly dominant part; firms are looking to continue developing London-based hubs, as opposed to growing regional offices. From an Asset Management perspective, Compliance functions are becoming increasingly sophisticated as traditionally generalist functions become more specialised.

When breaking down the hiring that we are seeing within Compliance functions, there are certain patterns which emerge. Primarily, candidates who remain in demand are those within advisory (product-based and regulatory-focused) and monitoring. Whilst there is an increase in demand for Compliance professionals who have broad regulatory exposure, the positions themselves are becoming increasingly siloed. This is due to the teams growing in size and scope to meet the demands of the regulators.

Levels of hiring have increased slightly over the past three months compared to the beginning of 2014. However, recruitment generally has remained fairly consistent (with the expected seasonal peaks around bonus-time and towards the end of the year) over the past two to three years. However, a more notable change is evident within the Investment Banking space, where the market is substantially more buoyant. There has been a noticeable trend of high volume recruitment, specifically in the Financial Crime space; many of the leading Investment Banks are building out entire teams, rather than just focussing on individual hires.

Role profiles

  • Regulatory Management & Policy: as a result of increased FCA and PRA requirements, in addition to the regulatory agenda being driven from the US, there is an increased demand for candidates with the ability to manage relationships with the regulator, and communicate with key stakeholders internally.
  • Product Advisory: Fixed Income and Equities specialists, both vanilla- and derivative-based, have been highly sought after this last quarter. As always, this niche area is commanded by a select pool of specialist candidates, who often demand high salaries and secure multiple job offers within a short period of time.
  • Monitoring: there has been a marked increase in the requirement for strong monitoring candidates who can demonstrate proven experience of conducting ‘deep-dive’ risk based monitoring reviews in line with internal policies, as well as from a regulatory perspective. The ability to carry out full cycle risk assessments continues to be a core focus.
  • Financial Crime: high profile fines continue to drive the agenda here, with specialists in Sanctions, ABC, AML Advisory and Fraud amongst the areas that are particularly in demand.
  • KYC/Onboarding: hiring of teams en-masse from the top layer of management through to Analyst/Associate level. This is both from a new business and renewal/remediation perspective.
  • Conduct Risk: retail and wholesale conduct continue to be under the spotlight, in line with the FCAs intension to ensure the fair treatment of all customers.

Candidates with niche skill-sets are continuing to gain healthy increases in regards to their basic salary when moving from one permanent position to another. Over the past quarter, the average salary increase was 22%. Across the Financial Services, the highest salary increases are being seen in the Regulatory and Advisory space, particularly at VP-level and above. Similarly, the pool of Monitoring candidates is such that demand is outweighing supply. This is a result of Monitoring departments being historically lean and generalist in the nature of their reviews that they carry out. In relation to ongoing high profile fines within Financial Services, hiring is continues to be at a considerable volume across the Financial Crime and Onboarding space. Alongside the increased demand for permanent SMEs within this space, there is also a requirement to bring in large numbers of contractors to work on specific projects. The result of such a competitive market is an increased requirement for a collaborative approach between us and our clients. At BRUIN Financial we look to place further emphasis and control on managing the recruitment process with our candidates. In addition, the speed of process continues to be a significant factor with multiple examples this year of the firm acting quickest succeeding in securing their candidate. As a result, transparency from all sides of the recruitment process is a necessity.

Contract/Interim Market
In the tail end of Q2 and beginning of Q3, we have seen a steady rise in volume in both buy- and sell-side recruitment within the contract market. This is a reaction to the increasing regulatory demands on firms across Financial Services.
The Wealth and Asset Management world has a high demand for senior compliance generalists and monitoring candidates with best execution being a focal point. Unfortunately these specific candidates have been in low supply. The sheer increase in compliance recruitment has left a void in the market for the ‘hot’ (topical) areas.

Investment Banking recruitment continues to focus their hiring on both regulatory projects and KYC/AML. Last quarter the theme was conduct risk and more recently we have seen MiFID II and EMIR/transaction reporting.
2014 is a good year to be a contractor with the power firmly in the hands of the candidate. With a plenitude of opportunities, candidates can expect to receive multiple offers from a range of clients. Thus, it is essential for each and every institution to remain as competitive as possible when attempting to attract contractors, but also retain existing staff. Daily rates are currently at their peak so far this year with several roles having sky-rocketed past the £1000 per day in comparison with the same role paying £750 per day 12 months ago.

Likely areas of focus in H2 of this year will be the regulatory project space for both banking and investment management, compliance monitoring, market conduct and Asset Management generalists.

Summary and Predictions
The outlook for hiring across the Compliance and Financial Crime remains strong. Bar the summer lull that is often witnessed, we are expecting to see consistent hiring. Q3/4 of 2013 remained constant in terms of hiring, and therefore we predict this will be repeated in H2 of 2014. The early indications from our side are signalling that we are likely to see much of the same for the latter part of this year in respect to both the Investment Banking and Investment Management sectors.