Compliance Market Commentary, Q3 2014

• Article by BRUIN Financial

Compliance Market Commentary, Q3 2014

Market Overview
High volumes of recruitment within Compliance have continued from Q2 throughout Q3, especially within the Bulge Bracket Banks. During the past quarter, Compliance has remained a hiring focus across all major banks predominantly in response to recent high-profile fines. In contrast, whilst hiring was a key focus in H1 for Asset Management Compliance professionals, we found job levels began to slow during the last quarter, partly due to the summer months, when we traditionally see less movement; but also in relation to the rapid growth at the beginning of the year. Many Asset Managers are waiting to are see how recent hires affect their teams before looking to fill any further gaps.

The candidate-driven market is stronger than ever with simply not enough top-tier candidates to fill positions. As a result, salary expectations from candidates remain high. This is further compounded by candidates receiving multiple offers, which has driven salaries higher still.

It becomes necessary to take a collaborative approach with our clients to ensure that we can counter the chances of losing a candidate to a competitor. Notably, candidates are beginning to turn their attention to the overall package on offer. Whilst the base salary will always be of prime concern, the break-down of benefits is increasingly important. Equally, as we approach the bonus period, candidates await to see what figures they will receive.

We will continue to see high levels of recruitment as we move into Q4. As with 2013, there will be pressure to secure the best candidates before the mass moves made traditionally in the New Year. With pending annual reviews and bonus announcements due, assurances will need to be made to make a move at this time attractive to the candidate.

With the shortage of excellent candidates it is essential to keep time-frames as short as possible and processes simplified to safeguard against the danger of candidates receiving multiple offers.

There will continue to be a requirement for niche and specific skill-sets across buy and sell-sides, particularly for candidates with strong regulatory knowledge, as the regulator continues to take a hard-line approach within Financial Services.

Notable Fines and Regulations
Santander fined £12,377,800 for failing to ensure it gave suitable advice to its customers and ensure that their financial promotions and communications with customers were clear, fair and not misleading.

Invesco Asset Management fined £18,643,000 for not complying with investment limits which are designed to protect consumers by limiting their exposure to risk.

BNP Paribas fined $8.9 billion for the violation of US Sanctions embargoes against trade with Iran, Sudan and Cuba.

Barclays fined £37,745,000 for failing to properly protect clients’ safe custody assets worth £16.5 billion.

A speech made by Tracey McDermott, Director of Enforcement and Financial Crime, the FCA, at the Thomson Reuters Compliance & Risk Summit in July this year highlighted upcoming areas of priority:
a) The new regime to increase accountability of individuals in positions of responsibility
b) Remuneration practices as they impact the sales culture of a firm
c) Analysis of customer complaints of mis-selling by firms
d) AML processes and controls in major banks
e) Operational launch in April 2015 of the U.K.’s new Payment Systems Regulator

Role Profiles
Financial Crime has remained an area of vast recruitment, particularly in the banks, as they continue to build out entire teams around the KYC and AML piece. There has been a particular demand for candidates with experience of high-risk clients as well as exposure to advising around ABC, Sanctions and CTF.

The Advisory space remained buoyant throughout the quarter, and whilst there is a constant demand across asset classes, there has been a shift in emphasis from Fixed Income to Equities Advisory as the year has progressed. We have also seen a rise in demand for Private-Side Advisory candidates, with a number of capital markets and conflicts / control-room based roles released to the market.

Conduct Risk remains a key area across the banks, particularly within the Wholesale space. This has been a tricky space to hire in as there is a very limited pool of candidates with the requisite background, as it is a relatively new theme.

With the AIFMD Passporting Regime occupying the buy-side throughout H1, Investment Managers are now focusing on the manner in which they conduct business, as a result of the FCA themed reviews around Market Abuse. This has driven up levels of recruitment within the TCF and Financial Promotions space, as concern for the customer comes to the fore.

As we have seen throughout the year, Investment Managers continue to grow the size of their compliance functions, causing roles to become increasingly siloed, replicating the patterns seen within the banks. With split functions, there is now an increasing demand for candidates with specific skill-sets to perform more niche roles.