The third quarter is normally a slow time of the year for compliance recruitment in the UK, but hiring was buoyant throughout the summer of 2018, both for contractors and permanent staff.

Q3 trends: compliance recruitment

In most years, Q3 is a time when financial institutions hire fewer compliance staff because of the school holiday period. However, we have seen a continuous flow of appointments to permanent jobs throughout the quarter, despite candidates going on holidays. Investment managers and medium sized banks have been the most active during this ‘quiet time,’ making sure that all signed-off jobs are filled before their companies plan their budgets for 2019.

After the drop in recruitment that started the year, Q3 did see a 19% increase in contract opportunities over the previous quarter. This rise in job numbers can be attributed to growth in staff levels at boutique asset management firms, investment banks, brokerages, FinTechs and private equity houses where steps are being taken to reduce an imbalance between contractors and permanent appointees.

As these smaller businesses earn more revenue, they also add to their regulatory responsibilities. To deal with this, they have increased their demand for people who can handle regulatory change and "second-line-of-defence risk and control." Article 41 of the European Union's eighth Company Law Directive lists the components of the so-called second line of defence as financial control, security, risk management, quality, inspection and compliance. The first line consists of management controls and internal control measures, the third consists of internal audit.

Brexit looms

Many firms have indicated they are keen to continue hiring in London but are also announcing their plans to expand into locations such as Luxembourg, Amsterdam, Dublin and Frankfurt. This Brexit-related activity has created some uncertainty in candidates and many are unsure whether to switch jobs before the ‘exit’ date of 19th March or not. Despite this, numbers of active candidates across the board have remained steady - the financial crime, compliance advisory and regulatory change areas have been particularly buoyant.

Top compliance posts filled during the year's third quarter

• Regulatory advisory - requires knowledge of directives and regulations such as MiFID II, the SM&CR, the GDPR, the AIFMD and UCITS V. Salaries: £80k-£120k (for experienced VP) and £120k+ (ED).
• Financial crime advisory - focused on such important subjects as the fourth Money Laundering Directive, sanctions policy and anti-bribery-and-corruption (ABC) policy. Salaries: £70k-£115k (VP) and £115k+ (ED).
• Product compliance advisory - in high demand but in short supply, requiring fixed-product knowledge and experience of providing real-time regulatory advice. Salaries: £80k-£120k (VP) and £120k+ (ED).

To ensure a successful end to 2018...

As hiring managers approach the end of the year, they will have to consider buying out contract candidates’ bonuses if they want to capture the best talent. Although this is an expensive thing to do, a lot of compliance professionals will be reluctant to walk away from a full-year bonus at this stage.

We expect to see a further increase in permanent opportunities, but this could be hindered by larger investment banks losing their appetites for wide-scale project hiring, particularly in financial crime compliance. Cost-saving persists as a big influence on recruitment in the industry, therefore we anticipate firms hiring more compliance people in the provinces as opposed to London, with the aim of setting up compliance functions in more affordable locations.

* Richard Eggleston can be reached on + 44 20 7092 0144