The prospect of Brexit - Britain's departure from the European Union - has had a noticeably devitalising, although unquantifiable, effect on compliance employment in the UK in the first half of this year. Recruitment has, however, picked up as the year has unfolded and is expected to hold steady in this third quarter of the year.

Brexit is already having an effect on compliance people in the UK. Although nobody knows what the final ‘deal’ between the UK and the EU will look like, we know that most large banks in London are already hiring workers on a temporary basis for Brexit-related projects. They are using the same types of people they previously hired for projects related to MiFID II (the European Union's second Markets in Financial Instruments Directive).

The locations in which they are trying to hire the most compliance temps seem to be Ireland in the case of the big US banks and Frankfurt in the case of the large EU banks. Indeed, if any US bank were to move its European headquarters away from the UK, it is safe to say that it would move it to Dublin. Luxembourg is also a notable option for many. We have helped a number of firms to hire people to work in these places, but one of the biggest problems we have faced is that talent, especially at the senior end, is hard to come by in these jurisdictions as people are unwilling to pull up their roots and move there. Some large banks are also hiring permanent compliance staff in Dublin, Frankfurt and Luxembourg.

Here, at-a-glance, are the 'top five' most frequently filled temporary and permanent compliance jobs.

Temporary

• Monitoring
• Junior compliance admin/associate jobs
• KYC analysts
• Compliance generalist
• Financial promotions

Permanent

• AML advisory
• Onboarding/KYC analyst
• AML QA/policy
• General asset management
• ABC/sanctions

Which sectors have been the most active in terms of hiring?

The larger banks have started to increase their temporary hiring as the year has progressed. The trend started off slowly because the Brexit vote in 2016 had persuaded them to put large projects on ice. Smaller banks and brokerages have been hiring at a brisker rate. Brokers, banks and AML operations at all manner of financial institutions have been hiring permanent staff.

Q1: uncertainties that affected hiring

Compliance recruitment in the first quarter of the year was hard to detect in both permanent and temporary realms, with many financial institutions not having set their hiring plans in stone. With Brexit at the forefront of their minds, firms were uncetain about the course that business would take. The number of compliance jobs was down from the same period last year, despite candidates being keen to hear about opportunities.

The malaise was not universal. Numerous firms hired contractors to work for their compliance monitoring, GDPR (General Data Protection Regulation) and regulatory teams, along with a handful of KYC (know your customer) remediation projects. In terms of permanent positions, asset managers and brokers were hiring at a reasonable rate because business was on the increase.

Q2: an improvement in compliance recruitment

Temporary job flow has picked up at a plethora of firms, ranging from top-tier investment banks, small asset managers and banks all over the City to businesses in counties near the UK. Unusually low levels of hiring in Q1 can be attributed to Brexit, but in Q2 firms realised that they needed to hire new people to keep up with the day-to-day business of compliance. This resulted in an increase in the volume of hiring in Q2. Interestingly, salaries have lower than normal - most prominently for general jobs in 'core' compliance.

Another noticeable trend from the past quarter was that of firms tring to hire people on fixed-term contracts instead of daily rates. Daily rates used to make up 75-80% of the market, but this has now swung to an even 50% split.

In most years so far, Q2 has been the quarter in which permanent financial service recruitment has started to gather pace. This was certainly the case this year. Although political uncertainty may have had some effect on the market, the two main causes of the pick-up in activity during Q2 were bonus payments and firms moving on from the MiFID II observance deadline in January. Job flow has been increasing continually but at this time of year - in late August and early September - it usually tends to subside.

The most desirable skills and qualifications

On-the-job experience is the most valuable type of experience in both temporary and permanent compliance employment. Regulatory experience, encompassing a strong understanding of the Financial Conduct Authority's rulebook, MiFID II or the EU's fourth Money-Laundering Directive (4MLD) were desirable. In various areas, additional courses and qualifications such as the ones offered by the Chartered Institute for Securities & Investment, the International Compliance Association and the Association of Certified Anti-Money-Laundering Specialists or ACAMS continue to be important. The ICA Diploma in Financial Crime/Regulatory Compliance is popular.

In the KYC and AML temporary markets during the first half of the year ('H1'), hiring managers looked for signs of further education such as the ICA Diploma in Financial Crime and the ACAMS qualification. In wider core compliance, an awareness of key regulatory topics was important and within core regulatory compliance.

Motivations

When most firms hired people in Q1 they were merely looking for replacements. As we have seen, big projects were in abeyance and this had a numbing effect on hiring for projects in general. People at firms were voicing doubts about the benefits of contracting, so firms thought about moving functions offshore as part of their Brexit contingency plans.

When compliance people thought about moving, their motivations centred around career progression, restructuring at their firms and the responsibilities attached to jobs. Hiring managers were motivated by the need to plan for growth and the need to replace leavers.

The most exciting jobs of H1

Temporary

1. Compliance generalist. Demand for these jobs always goes up and down at the behest of smaller banks and asset managers. Every successful candidate must have experience in more than one area of compliance. Depending on the type of firm, they will stipulate certain product exposure such as equities, fixed income, investment funds, foreign exchange etc. These roles previously would have paid in excess of £500/day, but this year are being paid more on FTCs at around £60,000 - £80,000.
2. Compliance junior/associate. This job is found througout the KYC business and in core compliance. Both of these areas are looking for people who can pay attention to detail and want to learn and grow in the field. A legal, economics or financial degree is beneficial. Most candidates regularly come from either operations or legal departments, having done such jobs as operations analyst or paralegal. The market rate is £25-38,000.
3. Monitoring. Compliance monitoring was the busiest area among the tier 1 banks in Q2. Previous experience on desk/thematic reviews is highly desirable but not essential. At places where it is not imperative, they will look at candidates with a good knowledge of products mixed with different operational experience or an investigative background. Rates are £50-70,000 or £350-450 a day.

Permanent

1. Compliance monitoring. This job is mainly in demand because of regulatory pressure, but also because there are no strong compliance monitoring/thematic review candidates on the market. This has been true on both the buy-side and sell-side of financial services, with both areas happy to consider candidates from the opposite markets as well as professionals with third line/internal audit profiles.
2. Regulatory advisory. Firms have adapted to MiFID II, but we are still seeing demand for regulatory advisory people. Such pieces of legislation/regulation as MiFID II, the Alternative Investment Fund Managers' Directive or AIFMD, UCITS V (Undertakings for Collective Investment in Transferable Securities) and the Senior Managers and Certification Regime or SM&CR have been their main obsession.
3. Investment guideline monitoring. This applies to the 'buy side' only. Hiring has been completed into retrospective teams year-on-year. Many organisations are changing monitoring systems, leading to new headcount and skill requirements. Coding skills and pre / post trade monitoring experience are heavily demanded. Previous experience of multiple monitoring systems shows an ability to adapt.

Predictions for the upcoming quarter

We expect the third quarter to remain stable, continuing on from Q2's rise in temporary recruitment. The hiring of compliance people at buy-side firms to help with the implementation of the SM&CR is going to be brisk.

We expect women to become more and more prevalent in compliance. Many organisations have told us that they would be happy to create opportunities for strong female candidates where there previously were none. Also in this upcoming quarter, firms will try to add to teams that "scan the horizon" and deal with regulatory change. Hiring will continue in Dublin to help various firms fulfil their plans vis-à-vis Brexit.

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