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​Compliance Trends in the UK

Jackson Baker
3 months ago by Jackson Baker
Linkedin Edits

As the overall financial services market bounced back in 2021, certain key trends and challenges could be seen in the UK’s compliance and legal sectors, from the implementation of RegTech to the rising importance of ESG. And with the recruitment market getting busier by the minute, these key trends are expected to continue well into 2022.

The below overview will provide a brief picture of the current state of the compliance recruitment market in the UK and will lay out what are the key trends of the compliance sector to pay attention to.

Movement in the Compliance Market

In 2020, uncertainty around the pandemic has resulted in financial services firms being incredibly cautious in terms of hiring and overall recruitment strategies. The legal, risk and compliance sectors within the space went noticeably quiet, with in-house teams adopting a business as usual approach whilst dealing with a new work reality.

The industry then shifted entirely in 2021, which saw the busiest recruitment market for over a decade. Hiring in legal, risk and compliance reached all-time high levels as the economy rebounded strongly, with firms fiercely competing for the best specialised talent.

Research from Vacancysoft found that risk and compliance vacancies in banking - and financial services as a whole - were projected to rise by 61% across the United Kingdom by the end of 2021 when compared to 2019 and 2020 levels, and by 46% in London alone.

An Overall Increase of Compliance Recruitment Activity

The compliance industry growth in 2021 could be attributed to the backlog from 2020, when financial services firms were refraining from hiring talent until they had more clarity on the repercussions of COVID-19. We have also noticed increased movement from professionals post-pandemic, as they were reluctant to vacate their positions in the midst of COVID-19.

Financial services firms have since upped their compliance recruitment to build resilience to regulatory changes and drive business growth. But with a worldwide candidate shortage and the implementation of technologies that could enable quicker recruitment processes, these same firms found themselves struggling to find talent.

Candidates were able to go through recruitment stages at a faster pace as they no longer needed to attend interviews in person. The most sought-after talent would therefore go through two to three stages of interviews in just one week, to then get multiple offers in a short amount of time. The fierce competition for top candidates - especially in senior or C-Suite positions - also led to aggressive counter offers being the new norm in the industry.

An Impact of Compliance Salaries

The candidate-led market sparked by talent shortages caused a substantial rise in salaries. In 2021, firms quickly learnt that one of the key tactics to retain their best talent was to drastically increase remuneration and financial incentives. For certain sectors, increasing compensation didn’t pose a problem: for instance, many hedge funds have had a strong couple of years - especially in macro and equity long/short funds - meaning that financial incentives kept on being sturdy during and after the peak of the pandemic.

The Rise of RegTech

Because of the challenge posed by the capacity of their compliance systems in the midst of the COVID-19 pandemic, financial services firms had to strengthen their regulatory monitoring and operational risk programs.

Many introduced RegTech, more specifically around surveillance of employees working from home. The main areas affected by the implementation of such technology were trading, communications and client onboarding, but we have also seen it being used for PA dealing and gifts and entertainment. This implementation represented quite a shift in the industry, as the majority of these checks had been carried out manually in the past: RegTech has enabled firms to introduce automation into the function and to make the process more efficient.

Compliance Recruitment and RegTech

The rise of RegTech within financial services has impacted the way firms are hiring their compliance teams. With compliance services becoming more tech-savvy, hiring managers are now increasingly seeking candidates who have strong RegTech experience. This is particularly true in the hedge fund space: these institutions are looking for an entrepreneurial style of Compliance Officer to enhance their processes while improving the efficiency of their old systems.

A Shift in Working Patterns Post Pandemic

Funds have taken different approaches when it comes to flexibility and working from home, which became the norm during the height of the pandemic. The market saw numerous American firms pushing for five days a week in the office, whilst the UK reintroduced working from home guidance mid-December 2021 due to the Omicron variant.

We have found that a lack of flexibility from employers when it comes to work-life balance caused firms to lose out on potential talent as many were - and still very much are - looking for flexibility. With a market that is essentially candidate-led, we anticipate firms to accommodate this requirement and offer more flexible working arrangements in the next few years.

A Growing Interest for Digital Assets

The digital assets sector has been gaining more traction over the past years, with hedge funds now starting to show an interest in crypto. The growing industry has started to attract top talent from the traditional space, with more legal and compliance professionals migrating over to the crypto side.

We anticipate such moves to become even more frequent in the next few years, as digital assets will continue to gain in popularity. Traditional firms will increasingly be forced to compete with crypto firms - especially those that are focused on sustainability issues - when it comes to top talent in the market.

All Eyes of ESG

With the introduction of the EU’s Sustainable Finance Directive Regulation (SFDR) in 2021, financial services firms have been looking into what SFDR means for their compliance and legal teams.

We have noticed recently in the traditional space an increased focus from compliance professionals on ESG, as Compliance Officers will be expected to assess social accountability and risk governance.

Gender Equality and D&I

The active promotion and implementation of D&I agendas is incontestably one of the fastest growing trends in the financial services sector - and has been for a few years now. Achieving gender equality seems to be well under way in the legal and compliance sectors within financial services in London: research has shown that 51% of the sector is currently occupied by women in the UK capital.

We have noticed in the last couple of years an increased awareness from firms around the importance of diversity in the recruitment process, which could be partly attributed to the growing focus on ESG. Businesses have been asking legal and compliance recruitment firms to provide candidates’ shortlists which supply an accurate portrait of our society.

In terms of working patterns, we have also seen a higher proportion of women preferring more flexibility than men. This might cause challenges for firms that are seeking to improve their gender diversity whilst also wanting employees to return to the office full-time.

Looking Forward

The competition for compliance recruitment and retention in the financial services space should continue into early 2022. After that is less certain, knowing we won’t see the same recruitment numbers as 2021, we predict compliance recruitment activity to return to normal levels over the next few years.

Moving forward we are cautiously optimistic; legal and compliance recruitment is high and competitive, and traditional firms such as hedge funds will face challenges battling for talent with innovative fintechs and crypto firms.

You can find out more information about hiring and salary trends within the compliance recruitment space in our Compliance Market Report. Alternatively, you can get in touch with the Rutherford team for a confidential discussion around your potential legal and compliance recruitment needs. Contact us for a confidential search, email us at enquiries@rutherfordsearch.com or see our latest vacancies.