GLOBAL TREND REPORT COMPLIANCE 2015 OUTLOOK

Transcription

1 GLOBAL TREND REPORT COMPLIANCE OUTLOOK

2 COMPLIANCE: THE PLACE TO BE IN 2015? In line with our commitment to keep professionals working in the compliance discipline up to date with employment and recruitment trends, at the end of 2014 Morgan McKinley conducted an international survey of its consultants in eight markets. Generally speaking the mood is optimistic. There is a huge demand for compliance professionals that cannot be easily satisfied, and at junior level, many companies are moving people across from other functions. Salaries are rising fast. That said, with the ever-changing regulations it can be a high-pressure environment, so there is often reluctance on the part of compliance professionals to move. Regulations such as MiFID, EMIR and Dodd Frank are driving demand for regulatory compliance professionals worldwide Globally, salaries are on the increase, even in countries like the UK where there is a good talent supply Experience on specific products and extensive knowledge of the regulatory environment are vitally important attributes Remediation and projects are driving employment growth in Australia In Ireland there is strong demand at the senior end of the market, but poor candidate mobility In Japan, by contrast, there is a lack of junior-level talent and demand picked up strongly in 2014 There is also a desperate need for more newly qualified talent in Singapore, where the market picked up strongly in Q4 Employers in the UAE face a whole raft of challenges and salaries are increasing rapidly. Sanctions are a major focus QUICK LINKS AUSTRALIA... 2 MAINLAND CHINA...4 HONG KONG... 5 IRELAND... 7 JAPAN... 9 SINGAPORE...11 UNITED ARAB EMIRATES UNITED KINGDOM It is difficult to tempt professionals to move in China as there is a lack of quality roles In Hong Kong there is a skills shortage developing, driving up salaries Both permanent and contract markets are buoyant in the UK and we expect to see recruitment gathering pace in FX following recent fines 1

3 A mentor or sponsor can assist your long-term career development. AUSTRALIA REMEDIATION AND COMPLIANCE PROJECTS DRIVING GROWTH In the latter half of 2014 there was an uplift in demand for compliance professionals in Australia, driven by regulatory change, remediation projects to fix or solve issues and deficiencies within their risk or compliance programmes, and increased regulatory activity. In particular, AML, with new customer due diligence rules, the Australian Prudential Regulation Authority (APRA) s CPS 220 standards and superannuation legislation such as StrongerSuper, SuperStream and MySuper have added to the regulatory burden, generating demand for skilled resources both on a contract and permanent basis. Financial crime and the associated risks will continue to be high on the agenda in Demand has been particularly strong in retail banking, investment banking and wealth management, as well as non-financial sectors such as FMCG, construction and infrastructure. Those with niche skill sets and/or legal qualifications are most sought-after, primarily at junior (recently qualified) and middle or assistant manager levels (with three to eight years experience, in the AUD 80,000 to 150,000 pay bracket). Overall the permanent employment market is quite stable, both in-house and in-practice, but we have seen growth in the contract market, with many opportunities being created in 2014, says Kate Boniface, Specialist Risk & Compliance Consultant at Morgan McKinley s Sydney office. There is a large passive candidate pool compliance professionals who would be open to new opportunities but who could also be susceptible to counter offers, she adds. We would obviously recommend these professionals to engage with a reputable recruitment agency. However, they should also consider getting more proactive with their own networking and seek advice from successful senior professionals and consultants to position themselves for success. In the compliance discipline a mentor or sponsor can assist you in the long-term development of your career, advises Boniface. Compliance professionals must keep abreast of the changing regulatory environment and position themselves as a business partner who can add value to an organisation. This means getting involved in broader activities, initiatives and projects beyond the traditional compliance role doing so will open up opportunities for interesting and career-enhancing secondments. Niche skill sets are sought after but candidates may find themselves boxed in if they become too specialised in a particular product or area. In the long run you will need some exposure to a broad end-to-end compliance function perspective if you want to step up to a senior role, says Boniface. In particular, employers will be looking for professionals who can translate complex legislation and regulation into commercial business terms. 2

4 SALARIES & BENEFITS We don t envisage any big increases in salary levels in Performance-related pay is likewise static. There is a trend among some employers to calculate bonuses with other benefits such as shares. 3

5 The market is currently stable but there are few new high quality roles on offer, so there is little incentive to move. MAINLAND CHINA SALARIES CONTINUE TO RISE BUT FEW NEW QUALITY ROLES Financial crime and the associated compliance risks, together with regulatory compliance, sustained fairly constant levels of demand for professionals in the compliance discipline through As well as all aspects of investment and commercial banking we have seen increased demand from the pharmaceutical, life sciences and medical devices sectors. There is inadequate supply of locally based talent to meet this demand and many Chinese companies are looking to source it from other APAC locations. It has been a relatively stable year and many compliance professionals are happy to stay put if they have job security and an interesting role, says Rio Goh, Country Head, Morgan McKinley China. The number of high quality positions is rather limited, so there is little incentive to move. The market may become a little more fluid if we see new regulations introduced in 2015 as this will create new opportunities. Moving ahead in China, as in other regions, will depend on a compliance professional s ability to position himself/herself as a business partner. You have to be proactive and go beyond a narrow view of your role in order to do this, advises Goh. SALARIES & BENEFITS Salaries are likely to increase at an average annual rate of 10 to 15%. 4

6 It is difficult to keep up with the musical chairs in this market. HONG KONG SKILLS SHORTAGE DRIVING SALARY INFLATION Recruitment budgets increased in 2014 and prospects are improving for Hong Kong-based compliance specialists as financial services companies face tougher new legal and regulatory requirements and tackle fraud and other financial crimes. The regulatory environment is getting more and more strict and corporate standards and ethics are under scrutiny, says Rouella Landicho, Manager, Risk, Legal & Compliance at Morgan McKinley Hong Kong. Private banking compliance has been an important growth sector over the past six months, along with investment banking, corporate banking and transaction banking. Financial crime, regulatory monitoring and corporate standards and ethics are focuses of attention. Companies are struggling to fill many roles, in particular at more senior levels from AVP to Chief Compliance Officer. As well as sourcing candidates from other regions, notably Mainland China, the UK and Singapore, many are looking to attract candidates from other business functions such as risk and operations, or from consultancies and professional services firms, says Landicho. The compliance contract market is also stable, with companies looking to appoint fixed-term hires for projects or maternity leave cover. Last year was very busy and we expect the same for We saw a high level of competing offers and counter offers in Hong Kong. It is difficult to keep abreast of all the musical chairs in this market because of the high demand for senior and experienced compliance candidates, says Landicho. All of this has meant a rapid increase in salary expectations, which is a challenge for hiring organisations. Quality candidates will find it relatively easy to progress so long as they keep up to date with all the HKMA, SFC, US FED/SEC regulations, especially those surrounding private banking, AML, sanctions, electronic trading and derivatives clearance. It is also important to network. Bilingual (English plus Mandarin or Cantonese) candidates command a premium. 5

7 SALARIES & BENEFITS After bonuses are paid we are projecting at least 15-25% increment on basic salaries for lateral recruitment. Internal salary increments can be between 10 and 15%. Candidates moving up to the next level can command between 30 and 40% raises on basic salaries. 6

8 Low candidate mobility and specialisation mean hiring organisations may face a challenging IRELAND EXPERIENCED CANDIDATES IN SHORT SUPPLY In Ireland the volume of new roles being created in compliance has been on the increase, in response to the combined effects of the economic upswing and new legal and regulatory developments. Recruitment budgets are increasing. This is already a tight market, so even a marginal change in the number of roles posted can have a significant knock-on effect, reports Louise Parkinson, Recruitment Consultant at Morgan McKinley Dublin. The main growth focus areas are regulatory monitoring, financial crime (in particular AML), regulatory risk, operational risk including business continuity, upstream risk, data protection and data privacy. Within the buoyant contract market, recruitment into AML roles has been a strong focus, particularly within funds and asset management, but rather less so in retail and corporate banking where AML is not usually a standalone role. There is very strong demand across all sectors for experienced compliance analysts and compliance managers. In the second half of 2014 we also saw many new Head of AML and Head of Compliance roles being created in Ireland, says Parkinson. While there is no shortage of people interested in moving into compliance, mobility and candidate availability have not yet caught up with the market s demands. The financial services market is very tightly linked to minimum competency requirements as set down by the Central Bank of Ireland and hiring organisations tend to prefer candidates with local experience of the regulations and legislation, and ideally those who already have a relationship with the Central Bank. The demand is thus focused on middle and senior roles. Graduate and entry level roles within compliance tend to be focused on AML, within funds and asset management and on data remediation projects within retail and commercial banking. Professionals with an Association of Compliance Officers in Ireland (ACOI) qualification are most in demand from companies based in Ireland, and those with the International Compliance Association (ICA) qualification most in demand from foreign multinationals with offshore or online businesses. Qualifications and relevant experience are key to career progression within compliance. Those who are keen to move into this area can gain practical experience and visibility by participating in projects and secondments while in their current role. The growing specialisation in compliance, combined with low candidate mobility, is causing problems for many hiring organisations. For example, a retail bank will rarely find a candidate with a background in general insurance who offers relevant experience, and vice versa. Compliance candidates in Ireland generally do not enter employment from graduate level, but rather work up to compliance through an operations function. This means that they are specialists by default, says Parkinson. New regulations that compliance professionals need to keep up with include the European Market Infrastructure Regulation (EMIR) and the Markets in Financial Instruments Directive II (MiFID 2). 7

9 SALARIES & BENEFITS With the growing talent shortage there is a strong upward pressure on salaries, which are currently increasing in the order of 3-10% annually, depending on industry and niche qualifications. 8

10 The candidate pool is small in Tokyo, especially at senior level and in financial crime and fraud investigation. JAPAN FINANCIAL SCANDALS AND CRIME DRIVING DEMAND The rising number of financial scandals, together with new legal and regulatory changes, have highlighted a need for Japanese investment banks in particular to hire more compliance professionals. The result has been high demand for compliance generalists, together with trade surveillance, control room and compliance advisory specialists. The Tokyo-based candidate pool is however small, which means that it often takes time for hiring managers to identify qualified professionals. The longer the role stays open, the more difficult it gets. Most of the 2014 hires were between associate and vice president level. There has been less activity at head of function and Chief Compliance Officer levels. The contract market is stable, with most hires in supporting administrative roles. The lack of junior (newly qualified) talent in the Japanese financial services sector means that investment banks often need to turn to other functions such as operations, front office and risk management, or even to look to candidates from the Big 4 in order to fill vacant posts. In a few instances, banks have had to look at relocating compliance staff on secondments to Japan from their overseas offices, says Lionel Kaidatzis, Managing Director, Morgan McKinley Japan. There has also been high demand among Big 4 and other consultancy practices to work on projects in the insurance industry. Insurance has until now not followed the same strict regulations as the investment banks, but they are coming under pressure from regulators to reform their infrastructures, processes and systems, says Kaidatzis In Japan, compliance professionals are expected to have a qualification from the Japan Securities Dealers Association. In addition to gaining experience working in derivatives trading, they must deepen and broaden their knowledge of governing regulations if they want to advance their careers. Bilingual (English and Japanese) professionals continue to be in high demand. Banks have spent time investing in junior talent, whom they have brought through rotation and functional mobility programmes, and we expect that many of them, having completed their apprenticeships, will be seeking new opportunities in the near future, whether internally or with new employers says Kaidatzis. Compliance professionals in this situation should get as much exposure as possible to the regulators, either as a point of contact or as a liaison during inspections. They should also proactively seek any opportunities that take them on a secondment working with colleagues overseas. Such opportunities provide the optimum career pathways. A breadth of experience is extremely valuable in this discipline, says Kaidatzis. In the medium term organisations looking to hire compliance professionals will still find it challenging to hire senior level candidates because of the small size of the available candidate pool. In particular we see an acute talent shortage in areas like financial crime and fraud investigation. It is also difficult for a hiring manager to maintain a high degree of confidentiality when hiring at vice president level or above, says Kaidatzis. 9

11 SALARIES & BENEFITS Salaries increased but only marginally in 2014 at most levels. However, compliance professionals at vice president level and above have commanded substantial increases of around 20%. 10

12 Compliance managers in asset management are in desperate need of junior support staff. SINGAPORE ACTIVITY PICKS UP IN Q4 Compliance processes are becoming more firmly embedded in Singapore-based organisations in response to regulatory changes and concerns about financial crime, so we saw new headcount and increasing recruitment budgets in What has been rather interesting and surprising, however, is that most of the new hiring has been delayed until late in the year. The market looked bullish at the start of 2014 but at the end of the first half, things were still not moving. It is was only in the last quarter of 2014 that they became active, which is the most difficult time to move people, observes Lucy Allcard, Senior Recruitment Consultant, Audit, Legal and Compliance at Morgan McKinley Singapore. Financial crime, market surveillance, compliance testing and audit have been hot areas in banking, which looks set to continue. We now expect to see further headcount being recruited into asset management and consultancy. Compliance managers in asset management are in many cases in desperate need of more junior support staff, says Allcard. With the government tightening the rules on employment passes it is increasingly difficult for hiring managers to address this need. They sometimes make things even more difficult by discounting professionals who have made several moves over the past few years, adds Allcard. The fact is, compliance salaries have become distorted. Anyone who has stayed in the same job for more than three years is likely to have fallen behind. The contract market is small in Singapore, mainly restricted to AML and regulatory projects. To get ahead in this market, it cannot hurt to specialise. This is where you can really add value to a business and it will bring you greater visibility, says Allcard. The demand for specialists is actually quite high whereas many compliance professionals believe that it is better to maintain a wide scope. In addition, compliance professionals should develop their communication skills. Ability to talk to the regulator and to business stakeholders is a major asset. 11

13 SALARIES & BENEFITS In some areas salaries may have peaked. Compliance professionals who stay put can only expect a modest raise. However, professionals who switch organisations can usually expect an increase of 10-15%. 12

14 In the UAE compliance is a high-pressure environment. UNITED ARAB EMIRATES RISING SALARY EXPECTATIONS Sanctions, investment banking compliance, and the ability to handle fraud investigations are all major growth areas in employment in the compliance function in the United Arab Emirates. There is a severe lack of talent coming forward, especially in the sanctions area. Most of the demand is focused at junior (recently qualified) and middle to assistant manager levels. Demand for senior compliance officers has been sluggish. An interesting development has been the successful growth of compliance consultancy firms in the region, which has been brought about by the number of market entrants and start-up firms, especially in the Dubai International Financial Centre. (DIFC) A registered compliance officer is mandatory within the territory of this regulator (DFSA), explains Alan Hynes, Compliance Specialist, Banking and Financial Services at Morgan McKinley. Compliance professionals who wish to move forward should carefully weigh up which specialisations will benefit them most on their career path. There is sufficient talent in know your customer (KYC) and on-boarding but sanctions and private banking compliance professionals are less visible on the market, says Hynes. Employers are likely to face rising salary expectations and difficulties in getting new staff on board as the pressures on the compliance function become ever more burdensome. Registered compliance consultants can be held personally responsible for any breaches in regulations this is a stressful occupation! Diversity of job seekers and Emiratisation quotas are adding to the challenges employers face. It is becoming more and more difficult for financial services companies to ensure that they stay on the right side of the law. A thorough knowledge of the different sanctions lists, Office of Foreign Assets Control (OFAC) and EU rules will not only make life less stressful but will also help candidates to secure interesting roles. In addition, being able to design and write up a robust compliance framework is a much sought-after skill, concludes Hynes. 13

15 SALARIES & BENEFITS Pay increases are currently running at 10-15%. Increasingly, hiring employers need to pay out the bonus that the candidate would have expected if s/he had stayed with the current employer. 14

16 Many now see compliance as the place to work, so junior-level professionals can expect more competition. UNITED KINGDOM PRODUCT EXPERIENCE AND REGULATORY KNOWLEDGE KEY TO ADVANCEMENT There is currently huge demand for compliance professionals in the United Kingdom and many organisations are prepared to pay a premium to attract the best talent a 20% pay increase on current salary is typical. One explanation is that financial services companies prefer to attract fresh talent from their competitors to broaden and deepen their ability to deal with the most pressing issues, which include legal and regulatory issues, the threat of financial crime, and political risks. In addition, the improved economic outlook in 2014 has been a contributory factor. Both permanent and contract markets are buoyant, with demand focused at the middle and assistant manager levels. Hiring organisations are particularly keen to recruit professionals with an ICA diploma, a certificate in AML and the Chartered Institute for Securities and Investment (CISI) Diploma in Investment Compliance. Experience of the regulatory environment is also important. Compliance professionals at the junior level face increasing competition as many now see compliance as the place to work. To move into a mid-level role, you need to demonstrate exposure to specific products and good regulatory understanding, in particular MiFID II, AiFMD, Dodd Frank and EMIR. In order to move up to senior level it is extremely important to demonstrate communication skills when dealing with business stakeholders, says Richard Eggleston, Manager, Compliance & Legal Contract at Morgan McKinley United Kingdom. Areas where skills are in particularly short supply include AML and front office advisory roles. Looking forward, there will be greater demand for candidates in compliance advisory with experience of foreign exchange and money markets, in view of the recent fines handed out by the Financial Conduct Authority, Eggleston predicts. 15

17 SALARIES & BENEFITS A compliance professional moving jobs can usually expect a salary increase in the order of 20%. Those who remain in their current role are likely to get a raise of 2-5%. 16

18 GLOBAL TREND REPORT COMPLIANCE A MORGAN McKINLEY GROUP COMPANY