The second quarter of the year is normally the time of year when compliance hiring picks up. After a slow first quarter, it certainly has done that in both temporary and permanent realms.

Let us begin with permanent appointments. Q2 is usually the time when the financial services recruitment market starts to get going and it was certainly the case again this year. There has been huge growth in the number of asset management compliance jobs on offer, particularly in the field of financial promotions, monitoring and assurance. We have also seen a significant increase in positions related to CASS, the Financial Conduct Authority's Client Assets sourcebook.

Although political uncertainty may have had some effect on the British job market, the two main causes of the pickup in activity during Q2 after Q1 were:

• Bonus Payments. By Q2, all financial service firms (excluding a select few) had paid their annual bonuses. This tends to be a very popular time for people to move jobs.
• MiFID II. Firms always knew that they were going to have problems obeying this complex piece of European law in the aftermath of the chaotic ‘go live’ date of 3rd January. Many firms have been having teething troubles and this may have sapped the headcount they approved in Q1.

The regulatory landscape is changing for asset managers, with greater scrutiny from regulators creating greater demand for compliance people. Ultimately, this will mean large increases in salary, coupled with rapid promotion, for people who want to move between jobs in the asset management compliance sector.

We expect to see continual increases in job flow until late August, when hiring tends to cool off.

Temporary positions

During Q1 I predicted that the market would improve and, lo and behold, we began to see improvements as soon as the clock struck 00:00 on the 1st of April. Job-flow has picked up at a plethora of firms, from top-tier banks to small asset managers and banks in the City, and at financial institutions situated on the outskirts of Britain, in neighbouring counties.

The demand for compliance contractors has cooled down during the first half of 2018. Financial crime professionals have experienced this decline the most, especially at the senior end. This is partly because some firms have "come out of regulatory enforcement" (no longer having to oblige the FCA's enforcement division) and this has reduced their reliance on contractors. Another contributing factor is the fact that the regulators want banks to employ permanent workforces to deal with the problems of the past and to make sure that their controls work well in future. Project teams in such functions as KYC ("know your customer") have been nearshored and offshored, so there is a dearth of people in London who are looking for these jobs.

It is not all doom and gloom, however. Firms have realised that they need to keep up with their day-to-day activities and this has resulted in an increase in the volume of hiring in Q2. Interestingly, salaries have been lower than normal throughout this quarter, most prominently for general jobs in core compliance.

We have, then, seen an increase in contracting jobs, particularly in asset management. Because fund managers have been extending their business coverage, they need compliance officers to deal with reviews and rules that pertain to financial promotions and marketing materials. Coupled with the Senior Managers and Certification Regime, which has yet to be rolled out over the whole gamut of financial services, there is a high demand for asset management compliance officers.

I have also noticed in the past quarter that more firms are hoping to hire people on fixed-term contracts rather than on daily rates. Normally, daily rates make up 75-80% of the market, but it has now swung to an even 50-50 split.

Where do new compliance officers come from?

Candidates for compliance jobs can and do come from many backgrounds. Some candidates who have pinpointed compliance as their chosen career path are hoping to get onto a financial service firm’s compliance graduate programme, which usually lasts two years and has four six-monthly secondments, during which time they work in different departments of the compliance function. After this, the firm’s compliance department will offer them full-time jobs. Another traditional route into compliance is law. A lot of lawyers who are well equipped to do policy jobs and manage regulatory change are moving into compliance. Other routes into compliance can be through audit, as second-line-of-defence monitoring jobs are very similar to some audit functions. More recently, we have observed plenty of ex-traders moving into jobs to do with surveillance or product advice.

The most exciting jobs of Q2

Temporary

1. Compliance generalist. This is always the province mainly of smaller banks and asset managers, because they do not have separated areas and departments to the same degree as the larger banks. This job demands experience in many areas of compliance, i.e. monitoring, surveillance, PA (personal account) dealing, G&E (governance and ethics) and control room. Various types of firm sometimes ask for people who have dealt with certain products such as equities, fixed-income products, investment funds, foreign exchange etc. These jobs used to pay in excess of £500/day, but this year they are being paid more on full-time contracts at around £60,000-£80,000 per annum.

2. Compliance junior/associate. We have seen junior hiring increase during Q2 in both the KYC area and core compliance. Both of these areas are open to candidates who want to enter compliance for the first time. They want people who pay close attention to detail and whose ambition it is to learn about the field and make careers there. A legal, economics or finance degree would be beneficial for anyone who wants to take this relatively easy route into compliance. Successful candidates in this area come most often either from operations departments or legal departments, having done such jobs as operations analyst or paralegal. The market rate is £25,000-£38,000 per annum.

3. Monitoring. Quarter on quarter, compliance monitoring has been the busiest area of compliance hiring. Q1 saw the busiest activity occurring at smaller 'tier 2' firms, and although this is still the case, it has also grown to be the busiest area among 'tier 1' banks in Q2. Experience on desk/thematic reviews is highly desirable but not essential for some firms. Wherever it is not imperative, the firm will be looking for a candidate with a good knowledge of products plus operational experience or an investigative background. Rates are £50,000-£70,000 per annum or £350-£450/day.

Permanent

We have seen plenty of permanent compliance and financial crime jobs at both buy-side (i.e. investing) and sell-side (i.e. product-touting) firms. With vacancies ranging from managing director down to junior appointments, organisations have also been trying to hire people away from the UK to Dublin, Frankfurt and Luxembourg. Our hottest jobs of Q2 have been the following.

1. Compliance monitoring jobs. This is 'hot' primarily in response to regulatory pressure, but also as a result of a dearth of strong compliance monitoring/thematic review candidates. This is true for both buy-side and sell-side firms, with both kinds happy to consider candidates from each others' markets, along with professionals with third-line-of-defence/internal audit profiles.

2. Regulatory advisory jobs. Many months after the deadline for the EU's second Markets in Financial Instruments Directive or MiFID II, we are still seeing organisations trying to hire regulatory advisory professionals. They are concentrating mainly on MiFID II, the AIFMD, UCITS V and the SM&CR.

3. Investment guideline monitoring jobs. Jobs of this type are for the buy-side only. Many organisations are now changing monitoring systems and this can lead to the creation of new jobs and new skill requirements. This has created some movement in the market. Firms are demanding coding skills heavily, along with pre-trade and post-trade monitoring experience. Previous experience of several monitoring systems is of great interest as it shows an ability to adapt.

Skills sought after in candidates for compliance jobs

• On-the-job experience is the most valuable for both temporary and permanent appointees.
• Regulatory experience, encompassing a strong understanding of the FCA Handbook, MiFID II or 4MLD.
• Depending on area, additional courses/qualifications such as the CISI (Chartered Institute for Securities & Investment) or ICA (International Compliance Association) diplomas in financial crime/regulatory compliance and the Association of Certified Anti-Money Laundering Specialists (ACAMS).
• Senior 'stakeholder' experience and transitional skills from similar departments.

Predictions for the upcoming quarter

Temporary

Q3 has started off with firms’ hiring remaining buoyant. The hiring for SM&CR implementation for buy-side firms is going to be an area of growth, despite the exact date being unknown - a number of firms are putting people in place in advance.

Permanent

We expect there to be an increasing prevalence of women in compliance. Many organisations have said that they would be happy to create opportunities for strong female candidates where vacancies do not exist at the moment. Firms will also try to add to their teams that deal with regulatory change and "horizon scanning" as the Government's Brexit-related policies become clearer, and hiring will continue in Dublin because of Brexit as well.

* Richard Eggleston can be reached on + 44 20 7092 0144; Ben Harris can be reached on +44 207 092 0168