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Mid Year Market Report 2012

Compliance

BARCLAY SIMPSONMID YEAR MARKET REPORT

2012COMPLIANCE

01/ ExECuTIvE SuMMARY/102/ MARKET ANALYSIS/203/ MARKET COMMENTARY/404/ SECTOR ANALYSIS/605/ OuTLOOK/9 06/ SALARY GuIDE/1007/ METhODOLOGY/1908/ ABOuT BARCLAY SIMPSON/20

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CONTENTS

ExECuTIvE SuMMARY01

Welcome to Barclay SimpSon’S 2012 mid year compliance market report

This is the 8th year we have produced a market report summarising and analysing recruitment trends in compliance. This mid-year report serves to review developments in the year to date and to provide an insight into how the recruitment market for compliance professionals may develop during the remainder of 2012 and beyond. We place great value on professional reaction to our reports and would appreciate your comments or any requests for further clarification or information.

an overview of the corporate governance recruitment market and an in-depth analysis of the economic and business trends can be found in our corporate Governance market report. it can be accessed in section 8, ‘about Barclay Simpson’, together with market reports covering all other areas of corporate governance.

Offers of employment were regularly made and accepted Six months ago we reported that in our opinion avoiding a major crisis and ‘muddling through’ with anaemic growth in 2012 was the best we could hope for. If those conditions were met we believed it would allow the compliance recruitment market to return to more usual levels of activity, where offers of employment were readily made and accepted.

A solution appears as distant as everour hopes were not met. in april it was announced that in spite of seemingly strong employment growth, two quarters of negative economic growth had left the Uk economy in recession. Whilst ‘muddling’ may be the best way to describe the affairs of the Eurozone, any end to the Eurozone crisis appears as distant as ever. Recruitment is a form of investment and investment is based on confidence. When companies and individuals are confident they invest and recruit, when they are not they are more likely to sit on their hands and wait for developments. The problem remains, too much debt and too little growth.

In our experience there have been recessions and any number of crises that have undermined the recruitment market. On many occasions they have appeared rather worse than now. The problem with the Eurozone debt crisis is that the political will to achieve anything like a credible solution is lacking.

There are some real areas of strengthWithin this environment the compliance recruitment market continues to function and there are some real areas of strength. Financial services groups are still recruiting albeit at lower levels and the careers of compliance professional are advancing. Notwithstanding the lack of opportunities available to some, there is no evidence that the threat of redundancy is any greater than usual. However, given the current level of uncertainty, it is difficult to perceive an immediate return to anything like historic economic growth and recruitment patterns across the compliance recruitment market.

The compliance recruitment market continues to function and there are some real areas of strength.

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MARKET ANALYSIS02

an indUStry facinG conflictinG demandS

Compliance departments in the uK are currently faced with not only an unprecedented barrage of new and proposed regulation but also a new regulatory regime. Worldwide in 2011, banks, asset managers, brokers and insurers were faced with over 14,000 regulatory announcements with different countries putting forward contradictory and competing proposals. one might imagine that there would be no better time than now to be looking for a new position as the financial services industry responds to these demands. However, as we reported earlier this year, whilst regulators have been keen to ensure that past practices should not be repeated, much of the damage caused by the financial crisis in terms of the solvency of the financial system remains. These new demands come as the financial services industry is looking to reduce costs.

In Europe, government debts are excessive not simply because they have borrowed too much, but because they are underwriting the debts of their domestic banks. These same banks have been supporting their governments by buying their debt.

Whilst some may find it difficult to sympathise with an industry that many would blame for the financial crisis, much of the industry is being squeezed. This may go some way to explaining their reluctance to further increase their costs by recruiting additional staff.

VacancieS

vacancies now coming from smaller groups The number of new vacancies fell from 109 during the last six months of 2011 to 95 during the first six months of 2012. The fall however does not necessarily characterise the market. The reason is the source of the vacancies. A major British bank can for example have multiple vacancies. Whilst it might flatter the total number of vacancies, it is only one employer. during the last six months, and what in our view is benefiting the market, is that a higher proportion of vacancies are now coming from smaller and medium sized financial services groups.

Demand, possibly at the expense of their boutique rivals, continued to fall at the major investment banks. Despite the crisis, the asset management industry is experiencing a resurgence in demand and is able to offer appropriately experienced compliance professionals multiple opportunities. Retail financial services is faring better than wholesale, the provinces better than London and smaller financial services companies better than their larger rivals.

in spite of the fall in the total number of vacancies, at 63 the number of closing vacancies has risen. there are two reasons. first, many companies are finding it difficult to secure the resources they require. Secondly, a number of companies are seemingly waiting for the perfect candidate. in the real world they rarely exist.

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• New vacancies

• Outstanding vacancies

Retail financial services is faring better than wholesale, the provinces better than London and smaller financial services companies better than their larger rivals.

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the source of the statistics and explanation of the terms used can be found in section 07, ‘methodology.’

candidate reGiStrationS

Registrations coming from across the spectrum Candidate registrations have remained broadly flat. There are two competing reasons for this. First, in times of uncertainty people invariably prefer the security of their existing employment. Conversely, and as a consequence of companies not investing and providing opportunities to move internally, people can become frustrated and decide to look externally. as we discuss elsewhere, notwithstanding the challenging economic circumstances, there are many companies who remain keen to recruit compliance expertise.

Registrations are coming from across the spectrum of experience with many candidates keen to see what opportunities are open to them. We also continue to see an increase in the number of enquiries from candidates wishing to embark upon a career in compliance. Without relevant experience it is a difficult move to make.

The number of defensive registrations declined to 16%. Whilst elevated it is significantly below the 47% achieved at the height of the financial crisis. clearly the vast majority of compliance professionals feel secure in their employment. the limited number of redundancies that have occurred have been in investment banking or when companies have withdrawn from business lines. there is currently no indication of any significant redundancies in compliance.

rate of placementS

Rate now increasing To provide a better insight into the dynamics of the compliance recruitment market, we are now producing a graph that plots the rate at which placements are made during the three year period under review. In order to provide a scale, we have taken our results from the last six months of 2010 as our 100% benchmark. the graph demonstrates the willingness of companies to recruit during the period, rather than simply registering vacancies and arranging interviews. it reflects the rate at which candidates are being offered and are accepting jobs.

In the last six months the percentage has risen from 38% to 52%. Although little more than half the rate it was in 2010 it does represent a significant increase on the second half of 2011.

compliance is suffering from similar challenges to other areas of corporate governance. however there are a significant number of smaller and medium sized companies, particularly in asset management and retail financial services, who regardless of sentiment really have no choice but to recruit compliance expertise externally. They are therefore prepared to compromise on their ideal candidate and make realistic offers. Given that many of the largest financial services groups are not actively recruiting, the increase is welcome and we believe sustainable.

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• Placement rate (%)

• Candidates registering

• Defensive registrations (%)

MARKET COMMENTARY03

conteXt

the compliance recruitment market is operating in an economic environment where there is no precedent of the Uk economy flatlining in the way it is. the eurozone has become a source of instability just as the rest of the world appears to be slowing.

The financial services industry and particularly the banks that dominate it are being squeezed. As they deleverage returns on equity and profits decline. In Europe, it has become difficult to know who is supporting who. Whatever it is, the financial system remains chronically weak.

Torrent of new regulationWithin this context the industry is being hit with a torrent of regulation. Basel lII was expected to be the first of a number of steps towards a better regulated global financial system. unfortunately global unity is breaking down and countries are putting forward contradictory and competing proposals. the industry in europe is spending an estimated £25 billion over the next three years to comply with an expensive patchwork of regulation. it is having to report far more regularly and in more detail. Frequently, financial services groups do not have the data gathering systems regulators require. New rules are often set to tight deadlines for compliance, requiring the industry to apply piecemeal solutions to IT systems. Most recently officials in Brussels seemingly want to create a pan-European bank watchdog that could intervene in financial institutions across all 27 member states.

To improve profitability and remain competitive the industry is bearing down on costs. however, the industry is torn

between this and ensuring that it is able to meet many, various and sometimes even contradictory regulatory requirements.

Given this, how would we summarise the current recruitment market? • First, few companies have formally

announced recruitment or head count freezes. however, in spite of conducting external recruitment campaigns, to save costs many ultimately decide to recruit internally.

• Secondly, there are few redundancies and employment remains broadly stable. The percentage of candidates entering the recruitment market because they feel their job security is threatened is within historic norms. There is no significant pool of immediately available candidates.

• Thirdly, there are a higher proportion of vacancies with smaller and medium sized companies. They do not have the skill base to recruit internally.

• Fourthly, companies will usually only commit to recruiting an external candidate provided the candidate is not only high calibre but also closely matches their criteria.

• Finally, the most sought after compliance professionals remain difficult to source. Not unreasonably many prefer the security of their existing employment relationship and are more open to being counter-offered by their existing employer. Clearly many companies are loathed to lose their existing resources and be faced with the cost and challenge of replacing them.

No longer simply a technical disciplineIn addition to cyclical changes in the compliance recruitment market brought about by the current uncertainty, it is apparent that economic weakness has accelerated an ongoing structural change. The requirements to secure a job in compliance are rising. for some compliance professionals there can no longer be a realistic expectation that they can get through a typical external recruitment process. It is not simply about qualifications and experience but having the necessary commercial and business facing skills. Compliance can no longer simply be considered a technical discipline. Because of this, as standards rise, almost regardless of market conditions, there will continue to be a chronic shortage of compliance professionals with the capabilities companies require.

this process is clearly evident. in response to the current environment many companies appear to want to hold out for the ’perfect candidate’. We would warn, like the perfect job, they rarely exist.

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The industry in Europe is spending an estimated £25 billion over the next three years to comply with an expensive patchwork of regulation.

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key market driVerS

We will take this opportunity to briefly discuss some of the specific issues that are likely to drive the current recruitment market.

Split of the FSA into the PRA and FCAThe new regulatory structure began to emerge in April when the FSA split to mirror the look and feel of the PRA and FCA. Questions have been raised as to how effective the new twin peaks approach will be as it creates structural barriers to a full corporate risk assessment.

There will need to be clarity in such areas and communication between the PRA and FCA will need to be effective to ensure that conflicts are resolved. it will take time to see whether the concerns that have been raised are valid.

Compliance officers are aware of the sweep of regulatory changes proposed. Companies are reviewing their compliance resources and skills to ensure they have the necessary capacity and capability to successfully manage the change.

Shadow banking and payment servicesregulatory reach continues to expand and is planned to extend to shadow banking and payment services.

The FSB broadly describes shadow banking as ‘credit intermediation involving entities and activities outside the regular banking system’. The G20 has endorsed the FSB’s approach and the compliance officer of any company that is involved in, or interacts with, shadow banking should closely track the developing regulatory regime.

There is a similar approach to payments services. The infrastructure of payment services is perceived as being systematically important and consideration is being given as to how best to regulate the sector to ensure its continuing effectiveness. The Treasury is planning to publish a consultation on the options later this year, including options for creating a new regulatory structure for the Payments Council and the inter-bank payments regime. all companies using payments services will need to consider the implications.

CommoditiesEnergy commodity trading potentially affects consumer interests. the expansion of the mifid rules has resulted in developments in the sector. as we reported in 2011 the fSa has stressed that it hopes to ensure an internationally harmonised approach and will be “ensuring that the new eU regime strengthens otc infrastructures in the right areas”.

Companies wishing to trade in this area continue to recruit technical specialists to help them through regulatory registration and ensure robust systems are in place. As with all regulated areas there is a push towards greater European integration and the European Securities and Markets Authority will continue to play a much greater regulatory role. Specific regulations are creating the need for specialist positions.

Proprietary tradingproprietary trading played a critical role in the global financial crisis. Governments and regulators responded with widespread regulatory reform including the “Dodd-Frank Act” and more specifically the volcker Rule. uK specific reforms included the vickers report.

under the draft MiFID II proposals, proprietary traders that are direct members of trading venues will be required to be authorised and regulated by their home member state. the type and scope of such regulation and authorisation is yet to be determined but are set to become another challenge for compliance functions.

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Compliance officers are aware of the sweep of regulatory changes proposed. Companies are reviewing their compliance resources and skills to ensure they have the necessary capacity and capability to successfully manage the change.

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SECTOR ANALYSIS04

inVeStment BankinG – SUBdUed demand

As forecasted in our last market report, recruitment within investment banking was subdued in the first half of 2012. There were only a limited number of vacancies typically at AvP – SvP level. These invariably required candidates to have both strong technical and business facing skills.

even though there were only limited vacancies and in spite of selective redundancies, candidate shortages remain. this is exacerbated by investment banks becoming even more selective. With recruitment budgets clearly restricted there appears to be little appetite to recruit candidates who do not meet already exacting recruitment criteria.

For the top tier investment banks Compliance Officers with specialist product knowledge continue to be highly valued. In the first half of 2012 Fx was in demand. Candidates with both strong product and technical knowledge who appreciate how regulations affect the business and more importantly who can communicate with the front office are much in demand.

Boutiques require generic skills For the smaller, boutique houses, candidates with more generic skills are sought. They are generally required to have hands-on experience of monitoring, training and advisory across a range of typically vanilla products.

The salary gap between investment banks and other industry sectors is narrowing as salaries in investment banking remain

under scrutiny for both business and political reasons.

Increased capital adequacy requirements continue to be one of the major regulatory concerns facing the industry which is likely to be enhanced when the PRA comes into force. We anticipate demand from investment banking is likely to remain subdued.

retail BankinG – demand HaS fallen Back

In 2011 many of the leading retail banks, having reviewed their compliance resources, chose to increase their headcount across a wide range of areas including policy, advisory and monitoring. Having expanded their in-house teams last year, demand from the retail sector fell back in the first half of 2012. This was driven by the larger retail banks and building societies deferring external recruitment and looking to recruit internally wherever possible. This was seemingly in spite of many compliance functions still needing to further bolster their resources.

An exception was financial crime and fraud. With the introduction of anti-bribery and corruption legislation in 2011 many companies have increased their financial crime resources and in some instances have established new teams.

Budgets have tightenedAfter the upward pressure on salaries last year, they have remained flat in 2012. Budgets have clearly tightened. However, retail compliance officers remain reluctant to move unless there is a significant career development opportunity available.

As with the rest of the financial services industry expectations from compliance departments are rising. Retail banks are now also looking for candidates with the technical regulatory knowledge together with business facing skills as they increasingly look to align compliance more closely with their business lines.

inSUrance, life and penSionS – inSUrance companieS HaVe Become leSS fleXiBle

having provided a steady flow of vacancies during 2011 and in spite of pressure from the FSA, the rate of vacancies from the insurance slowed during the first half of 2012. Candidates with experience in complaints procedures remain in demand to ensure that companies meet TCF requirements and PPI claims remain a significant area of focus for companies operating in the general insurance market.

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The salary gap between investment banks and other industry sectors is narrowing as salaries in investment banking remain under scrutiny.

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Candidate shortages remainCompanies are currently being precise in their recruitment requirements and the flexibility that was apparent last year has largely gone. Demand is centred on middle management positions and candidates are expected to closely match the experience and skill sets required. When they do, perhaps unlike other sectors, insurance companies are usually proceeding with realistic offers. Given the precise nature of the experience required it is not surprising that candidate shortages are an integral part of the market. this is not helped by it becoming increasingly difficult for candidates to move between insurance sectors. Whilst candidates with sought after experience can still expect to receive multiple offers, such demand is not necessarily reflected in significant increases in salary.

We expect the insurance sector to continue to provide a steady stream of vacancies for the remainder of 2012.

aSSet manaGement – a BUoyant Sector

The asset management sector was the source of significant demand for compliance specialists in the first half of 2012. notwithstanding the frequent requirement for specific skills and experience, those with relevant sector experience can potentially choose from a range of opportunities.

As usual, smaller asset managers look for good all-round experience with larger companies seeking more specialist skills. This is creating a divide that can be difficult for compliance professionals to move across. Smaller

companies potentially believe those with specialist skills lack the generalist, hands on experience as well as potentially the softer skills necessary to communicate effectively with the front office. Conversely larger companies want in depth knowledge of specific areas to complement the range of skills and experience they already have.

Companies becoming more selectiveAt the mid to senior level, compliance professionals are now invariably expected to be comfortable dealing across the business. Influencing and communication skills in asset management are becoming almost as important as technical knowledge. Companies are also becoming more selective with many not prepared to consider candidates without strong academic and professional records. the growth in demand and the lack of appropriately qualified candidates is resulting in many positions going unfilled for extended periods of time. For those companies unable to match market rate salaries there is little choice but to compromise on the skills and experience they require.

BrokeraGeS – an eVolVinG Sector

Compliance within the brokerage sector is currently evolving and this is driving demand for compliance professionals. There is a broad realisation that controls and processes need to be put into place for adaptation to future regulatory oversight. The skills required in the sector are varied and include advisory, monitoring and generalist knowledge of the brokerage sector.

candidates with diverse product knowledge are in demand with those having fixed income and equities experience being the most sought after.

As with most areas there seems to be a drive towards a more integrated European approach as well as an attempt to harmonise with uS regulations. This has created a demand for candidates who have a strong regulatory knowledge of different jurisdictions.

after some initial reluctance, salaries in the sector are rising but outside of the largest brokerages have yet to approach salaries paid in investment banking.

proprietary tradinG

Proprietary trading was traditionally the domain of banks with sufficient balance sheet strength to cover the risks. It ultimately led to banks taking risks they did not fully understand and was a major contributor to the financial crisis. Since

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Companies are also becoming more selective with many not prepared to consider candidates without strong academic and professional records.

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then banks have become far more circumspect and the Volcker rule, one of the more controversial parts of dodd frank is seeking to curtail such activity.

Banks exiting proprietary trading has encouraged some of their former traders to set up small, independent proprietary trading companies. They are financed from outside investors and are looking to profit by bringing new levels of engagement to investment strategy processes.

This is potentially a new area for compliance professionals and it is being driven by both standard trading and the more exotic algorithmic or high frequency trading. although it is primarily being driven out of chicago, there have been a number of start ups in london. There is a demand for compliance experience of algorithmic trading gained within the big banks. These are potentially interesting and financially rewarding positions.

conSUltancieS

Demand from the consultancy sector is usually closely tied to developments in the wider economy. As we reported at the start of the year whilst a number of consultancies supposedly have vacancies, far fewer are currently actively recruiting. We expect little change until a greater level of confidence is restored in the financial services sector and wider economy.

tHe contract market

as we anticipated at the start of the year, the number of compliance contract roles fell in the first half of 2012. Conversely, the number of available contractors has grown. This is partially

the result of contractors taking longer to be re-engaged. As a consequence, whilst companies have become more selective, the availability of contract staff is good.

new regulation is still driving the demand for competent and experienced compliance contractors. Suitability reviews, RDR, MiFID and Dodd-Frank are all high on the regulatory agenda. vacancies are currently evenly spread across the financial services industry with perhaps private wealth management enjoying the largest increase in demand. This appears to be the result of suitability projects. The insurance sector is also buoyant, as it continues to come under increased regulatory scrutiny.

Decision making processes are taking longer and turnaround times are currently extending up to a month and beyond. In some cases this is leading to the otherwise preferred candidate accepting an alternative position. contractors are currently more likely to accept the first suitable confirmed offer they received, preferring to ensure a continuous record of employment.

The imposition of AWR regulations in October appears to have had little effect on the market. however, companies employing contractors on a day rate basis are stipulating that contractors must be employed through limited companies. Fixed term contracts have also become popular but are of less interest to career contractors. They prefer the tax advantages of being employed through their own limited companies.

Unless there is a sudden economic development we anticipate that the flow of contract opportunities is likely to remain at current levels. companies will continue to be selective and will not employ a contractor unless the candidate closely matches their requirements.

New regulation is still driving the demand for competent and experienced compliance contractors. Suitability reviews, RDR, MiFID and Dodd-Frank are all high on the regulatory agenda.

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OuTLOOK FOR 201205

along with most others, we were happy when the cracks in the finances of the eurozone were papered over in 2009. it was convenient to believe that structural adjustments and economic growth would take care of the debts.

Tough political choices need to be madeClearly it did not happen. Tough political choices still need to be made whilst economies continue to fester under too much debt and too little growth. unfortunately we see no immediate end in sight.

For those who believe that the grass may be greener elsewhere, readers may be interested to learn that the majority of compliance professionals are employed by financial services groups who make their recruitment decisions on a global basis. if they are not recruiting compliance professionals in the Uk, the chances are that they are not doing so anywhere in the world. in this respect it has become a global recruitment market.

Compliance employment remains secure Whilst heads of Compliance are frustrated because they are not always able to recruit the compliance staff they want and compliance professionals can be frustrated by the lack of opportunity, unless the economic situation deteriorates further, the vast majority of compliance professionals remain in secure employment. to date the casualties are the recruitment industry where much fruitless work is being undertaken and

those compliance professionals who subjectively believe they have the skills necessary, but objectively, as the role of compliance professionals continues to develop, do not.

have the banks become unmanageable?however the financial services industry or more particularly the banks face a new challenge. All the recent debacles where greed and incompetence have supposedly trumped good commercial judgement, have to date benefited corporate governance and specifically compliance. On the back of the political and regulatory response compliance departments have been established and expanded.

the most recent revelations regarding the cynical rigging of liBor, which may well be a prelude to the exposure of further manipulation of market rate sensitive data, could have unpredictable and far reaching consequences. It is evidence that the largest banks have potentially become unmanageable.

Significant latent demand existsour view has not changed in the last six months. We perceive there is significant latent demand for compliance expertise. the economy does not need to return to even historic growth rates for this demand to be released. What it does need is a resolution to a problem that for almost a year now regularly prompts market participants to believe the European economy is teetering on the edge of meltdown.

Tough political choices still need to be made whilst economies continue to fester under too much debt and too little growth.

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SALARY GuIDE06There is a significant amount of latent demand for compliance professionals. however, where compliance departments are actually recruiting, they are seeking a precise skill match.

“in this mid year report we are including a Salary Guide. this Guide is designed to provide compliance professionals with advice and guidance on the salaries and the overall remuneration packages currently available to them.

Most compliance professionals, even if they are not looking to change employer, are keen to know their market worth. Given the huge diversity of compliance officers this is not easy to address. Further, whilst Cv’s and experience get interviews, it is character and personality that get offers of employment and a tangible measure of market worth. Equally the way the market rewards compliance professionals is not perfect. Every company like every compliance department is different. Two otherwise similar compliance professionals may enter the recruitment market and ultimately accept materially different salaries. any offer of employment is usually evaluated against a number of both objective and subjective parameters. Salary is only one parameter, albeit usually the most important one. Also, for many compliance professionals the number of potential opportunities open to them can be frustratingly limited. This may be a consequence of their experience or by reason of where they are prepared to work. In many regions of the uK there are now only limited numbers of compliance departments and no discernible recruitment market.

We provide these caveats and fight shy of calling this section a ‘Survey’ because we are aware that the compliance recruitment market is sufficiently diverse and every acceptance of a new position is sufficiently unique that it defies simple categorisation. Given that, without doubt compliance professionals and their employers want ‘guidance’ and

this is what this section attempts to provide.

The guide is in three sections: • The first section is a review of the

pressures and influences on salary levels within compliance.

• The second discusses salaries within the context of the wider remuneration packages that are usually available to compliance professionals.

• Finally we provide salary guidance across a range of levels and financial sector markets

InfluencesThe best that can be said about the uK economy is that it is a low growth economy. Whilst unemployment is seemingly falling a rise is most likely only being kept in check by weakness in the economy putting a severe squeeze on pay. Real earnings along with living standards are falling. There is little to feel good about.

if recruitment is a form of investment, which we believe it is, then from our perspective companies are not investing. it is apparent companies are routinely looking to recruit internally rather than invest in what is likely to be a better external option. Whatever the demand for compliance professionals, it is against a backdrop of employers pushing wages down and postponing investment where possible.

You will have read earlier in this report that there is a significant amount of latent demand for compliance professionals. however, where compliance departments are actually recruiting, they are seeking a precise skill match.

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Offers rejected as deemed too lowin our last market report we noted that companies were rigidly controlling costs and a higher proportion of offers than usual were not being accepted because they were deemed to be too low. Whilst that was the case last year when 26% of offers were considered too low, a different picture emerged in the first six months of 2012. Most recently only 19% of offers were rejected because of the salary.

The fall from 26% to 19% is most likely the result of increased pressure on companies to recruit. For some companies the need to recruit compliance professionals externally can only be deferred for so long. Given that offers are likely to be made to those relatively scarce individuals who closely meet their requirements, there is an onus on companies to make offers that will ultimately be accepted. companies are therefore currently more likely to meet the realistic expectations of prospective recruits.

Motivation for entering the recruitment market it is interesting to review the motivation of compliance professionals entering the recruitment market during the

course of the last 6 months, against a similar period five years ago and before the financial crisis.

The analysis is broken down between those who are primarily motivated to increase their salary, those who feel they have no choice because of real or apparent threat to their job security and the majority who are simply seeking career progression.

at 16% defensive registrations are close to their long term average and half what they were in 2009. companies are retaining staff and in spite of perceptions otherwise, there is not a significant pool of redundant compliance professionals prepared to accept whatever offer is made to them.

The most likely reason fewer candidates are not explicitly looking to increase their salary is that they recognise the depressed nature of the recruitment market. Times are widely recognised as tough.

Notwithstanding that the primary motive for the majority of candidates entering the recruitment market is career development, most compliance professionals as a by product of changing employer will seek a salary increase.

Salary increases achieved by changing employerWe have updated the chart of the average salary increase achieved by compliance professional changing jobs.

We reported at the start of the year that we would be surprised if the long term average of 14% achieved in the second half of 2011 would be surpassed. in fact it has moved up to 15% and is close to its long term average. It is indicative that there is no flood of compliance professionals in the recruitment market willing to accept whatever salary is offered to them. As the vast majority of them are in secure employment, they not surprisingly

• Offers rejected as too low (%)

• Motivation for entering the recruitment market 2012 (%)

• Motivation for entering the recruitment market 2007 (%)

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• Increase in base salary (%)

wish to be adequately compensated for moving.

Distribution of salary increasesAverages usually hide a wide cross section of results and it is no different in the case of the salary increases achieved by compliance professionals changing jobs.

During the course of the last year the distribution around the 14-15 % average is described in the chart.

the breakdown reveals a wide distribution of increases. in fact 20% of compliance professionals moved for an increase of 5% or less.

From a salary perspective the current recruitment environment can be summarised as follows. The number of companies actively recruiting is relatively low. however they need to recruit and will do so provided compliance professionals closely match their expectations. despite the recessionary/low growth influences

buffeting the economy, the supply of candidates and particularly those with the skills and experience companies wish to recruit is restricted. To recruit compliance professionals with the necessary skills companies need to make realistic offers that include increases not significantly less than historic norms.

Salary Vs remUneration

Whilst base salaries always catch the headlines, offers of employment invariably include other benefits which together with base salary go to form overall remuneration. Base salary and overall remuneration can be significantly different. In this section we will go through the other benefits that usually are or may be included in offers of employment.

holiday entitlement As a general rule holiday entitlements are more generous in the public sector. In the private sector the range is between 20 and 30 days. The number of days holiday granted is frequently related to the level of seniority and can also be linked to the number of years service. If the latter is the case then the initial holiday entitlement is likely to be lower than it might otherwise be. as a strategy it represents a good way of rewarding loyalty and retaining staff but a poor way of attracting staff.

At Senior Compliance Officer level we would consider 25-30 days holiday to be usual and for 90% of offers to fall into a 24 to 28 day range. We would be sympathetic to a compliance professional objecting to a 21 day holiday entitlement and be very pleased to be party to an offer of 27 days or over. At head of Compliance level three extra days can be added.

an increasingly popular benefit is to provide employees with the opportunity

to buy additional holidays. this is usually up to 5 days and they are purchased through salary sacrifice.

Bonuses the majority of companies offer some form of bonus, whilst potentially a good way of retaining and motivating staff, bonuses are almost invariably an inefficient way of attracting them.

compliance candidates are becoming more wary of bonuses and in some instances, where employers will not make a compensating increase in base salary, it is now more likely to result in an offer being rejected.

Bonuses are usually non contractual, often discretionary and may be paid on the basis of corporate or personal performance or a combination of the two. There is often a qualifying period. The difficulty with bonuses is that whilst a compliance officer entering the recruitment market, having benefited from a bonus, will add it to their base

The number of companies actively recruiting is relatively low. however they need to recruit and will do so provided compliance professionals closely match their expectations.

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• Distribution of salary increases (%)

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salary, they are more inclined to discount bonuses from potential employers. This goes some way to explaining what can otherwise be relatively high increases in the base salaries achieved by compliance professionals moving between employers.

Given that potential recruits are likely to apply some form of discounting to whatever prospective bonus is offered, it would be ultimately cheaper to simply roll the bonus into base salary.

Bonuses vary considerably and as it stands a typical offer made to a compliance professional will contain a non contractual offer of a bonus. Given the difficulties that it tends to engender, bonuses are now more likely to begin accruing from the time that employment starts rather than accruing from the start of an annual qualifying period.

We would expect at Senior Compliance Officer level any prospective bonus to be in the range of 10% - 20% and perhaps double that at head of Compliance level. hedge funds’ bonuses continue to set the bar.

Pensions for new recruits final salary pensions no longer exist in the private sector. for those who still benefit from them they have become increasingly valuable and the cost of giving them up to join a new employer are most often prohibitively expensive.

It would be unusual for a company not to offer some form of pension benefit. Pension schemes in the private sector are invariably money purchase where the company commits to making a contribution based on a percentage of salary. Whilst there is often a short qualifying period before contributions commence, a period in excess of six months would be considered unusual.

Most arrangements require the employer to make a contribution based on a fixed percentage of base salary. The employee may or may not be required to match it. frequently employers will be prepared to match additional contributions made by the employee up to a fixed percentage. the percentage may increase with the age of the employee, their years of service and their level of seniority.

At Senior Compliance Officer level we would consider an employer contribution of 3% matched to an additional 5% employee contribution typical. This leaves the employer contributing 8% out of an overall 13% pension contribution. Generally larger more established companies have more generous pension arrangements – some global banks even contribute 17% to an employee’s contribution of 3% and match up to a further 3% leaving an overall pension contribution of 26%.

Cars / Car allowances Cars or car allowances have become a less common benefit for Compliance Officers and their popularity with both employers and employees is declining. They can still be expected where a role requires significant travel and at head of Compliance level. in terms of overall remuneration a car allowance is frequently offered in lieu of a car and is often considered as non pensionable salary when evaluating overall remuneration.

Other benefits The most valuable of these is Critical Illness Cover which is expensive to provide and it is usually restricted to senior roles. However, private Health insurance is common and may be extended to all immediate family members.

A Senior Compliance Officer could usually expect health insurance to be offered only to them and not their family. Life assurance, usually linked to a pension scheme is usual as is payment of at least one professional subscription. Other benefits may include season ticket loans in London, gym membership, subsidised dental care, personal and accident insurance and staff discounts. These are generally low value benefits.

Flexible benefits this refers to schemes where employees are offered limited core benefits in addition to their base salary. These can either be taken as salary or employees can choose to buy from a menu of such benefits. Such schemes became popular 10 years ago particularly in the accounting profession but have not been universally adopted.

Flexible working Flexible working, that is the opportunity to vary hours of work, whilst potentially popular, is not a common benefit. most offers of employment in the private sector will list core hours and an employment base which is usually not formally negotiable. however, many companies, once employment starts, are often prepared to be more flexible on say start and finish times and are ultimately more concerned with output rather than simply attendance.

For new recruits final salary pensions no longer exist in the private sector.

“

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Salary GUidance

Barclay Simpson analyses the salary data that accumulates from the placements we make in the uK. This provides a guide to the salaries available. In each sector of the financial services industry we are providing guidance on what we believe to be the range and the likely average salary available to compliance professionals.

The salary ranges quoted are for good rather than exceptional individuals and take no account of other benefits in addition to the salary that usually accrues to compliance professionals, such as bonuses, profit sharing arrangements or pension benefits.

inVeStment BankinG ranGe aVeraGe

Compliance Trainee (0-12 mths)

£20 – £32,000 £25,000

Compliance Assistant (1-3 years)

£30 – £45,000 £35,000


£40 – £55,000 £48,000

Compliance Manager(3-5 years)

£45 – £75,000 £60,000

Compliance Manager (4-7 years)

£65 – £90,000 £80,000

Senior Compliance Manager £75 – £100,000 £90,000

head of Compliance £90 – £110,000 £100,000

head of Compliance (Group head/Country head)

£100 – £160,000 £130,000

Global head of Compliance £120 – £200,000 £160,000

inVeStment BankinG – aml ranGe aVeraGe

Junior and KYC £20 – £30,000 £22,000

Junior Manager £30 – £50,000 £40,000

Senior Manager/Deputy MLRO £60 – £80,000 £65,000

Stand-alone MLRO £80 – £110,000 £95,000

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aSSet manaGement – inStitUtional & retail ranGe aVeraGe


£20 – £30,000 £22,000


£30 – £45,000 £35,000


£40 – £55,000 £48,000


£45 – £65,000 £60,000


£65 – £90,000 £80,000




£100 – £160,000 £130,000


aml ranGe aVeraGe

Junior and KYC £20 – £30,000 £22,000


Stand-alone MLRO £80 – £110,000 £95,000

pre and poSt trade inVeStment reStrictionS ranGe aVeraGe

Junior/Coding Input only £20 – £30,000 £22,000

Analyst £30 – £45,000 £37,000

Manager £55 – £70,000 £60,000

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General inSUrance ranGe aVeraGe


£23 – £30,000 £26,500


£25 – £35,000 £30,000


£30 – £40,000 £35,000


£40 – £50,000 £45,000


£50 – £75,000 £65,000




£80 – £130,000 £100,000


aml ranGe aVeraGe

Junior and KYC £25 – £35,000 £30,000


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retail BankinG, life & penSionS and mortGaGeS – Head office roleS ranGe aVeraGe


£25 – £35,000 £30,000


£30 – £40,000 £35,000


£30 – £45,000 £40,000


£35 – £50,000 £42,000


£40 – £55,000 £45,000




£80 – £120,000 £100,000


aml ranGe aVeraGe

Junior and KYC £20 – £30,000 £25,000


Stand-alone MLRO £50 – £75,000 £65,000

otHer SpecialiSmS ranGe aVeraGe

Complaints handling £25 – £35,000 £30,000

Financial Promotions £30 – £50,000 £45,000

T&C Officer £35 – £60,000 £40,000

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retail BankinG, life & penSionS and mortGaGeS – local officeS ranGe aVeraGe


£18 – £22,000 £20,000


£20 – £25,000 £23,000


£25 – £35,000 £30,000


£32 – £38,000 £35,000


£35 – £50,000 £40,000




£60 – £100,000 £75,000

aml ranGe aVeraGe

Junior and KYC £15 – £22,000 £18,000


Stand-alone MLRO £40 – £65,000 £52,000

otHer SpecialiSmS ranGe aVeraGe

Financial Promotions £24 – £45,000 £37,000

T&C Officer £30 – £50,000 £40,000

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METhODOLOGY07We speak directly with heads of department to discuss their current and future recruitment requirements.

“As recruitment consultants we spend much of our time talking to and dealing with compliance and human resources departments. We speak directly with a number of heads of department to discuss their current and future recruitment requirements to gain a broader picture as well as a qualitative perspective which is invaluable for our market review. We also attempt to portray the market in terms of quantitative data based on a sample of 35 compliance departments.

The core statistics provide the following key information:

vacancies• number of vacancies generated

during the period

• number of vacancies at the end of the periodThis, over time, provides guidance on the rate at which vacancies are being generated and an indication of the ease with which companies are filling these vacancies.

Registrations• number of candidates registering

in the periodThis monitors the flow of candidates into the recruitment market and, combined with the number of vacancies generated, gives an insight into the balance of supply and demand.

Defensive registrations• the proportion of candidates

registering for defensive reasonsThe percentage of candidates registering with Barclay Simpson because they have been made redundant or perceive the threat of redundancy (i.e. who register for defensive reasons), can provide a useful insight into the behaviour of the recruitment market.

Rate of placements• the rate at which placements

are being made

This is based on the number of placements made during the period and is a good indication of the propensity of companies to actually recruit rather than simply register vacancies and conduct interviews. It is presented in relative rather than absolute terms with 100% being the highest rate in the three year period under review.

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ABOuT BARCLAY SIMPSON08

Barclay Simpson is an international corporate governance recruitment consultancy specialising in internal audit, risk, compliance, information security, business continuity, legal and treasury appointments. Established in 1989, Barclay Simpson works with clients in all sectors throughout the uK, Europe, Middle East, North America and Asia-Pacific from our offices in London, Edinburgh, New York, Dubai, hong Kong and Singapore.

We add value by using our unique focus on corporate governance, our highly experienced specialist consultants and access to both the local and international pools of corporate governance talent. Our strength lies in our ability to understand client and candidate needs and then to use this insight to ensure our candidates are introduced to positions they want and our clients to the candidates they wish to recruit.

An overview of the corporate governance recruitment market and an in-depth analysis of the economic and business trends that are likely to shape the overall recruitment market can be found in our Corporate Governance Market Report.

We also produce other specialist reports, each of which can be accessed for free on our website:

www.barclaysimpson.com/2012-mid-market-report-corporate-governancewww.barclaysimpson.com/2012-mid-market-report-internal-auditwww.barclaysimpson.com/2012-mid-market-report-riskwww.barclaysimpson.com/2012-mid-market-report-information-securitywww.barclaysimpson.com/2012-mid-market-report-legal

Barclay SimpsonBridewell Gate, 9 Bridewell PlaceLondon EC4V 6AWTel: 44 (0)20 7936 2601Email: [email protected]

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If you would like to discuss any aspect of the reports please contact the following divisional heads:

Corporate Governance Adrian Simpson [email protected] & IT Audit Daniel Flynn [email protected] Sacha hughes [email protected] Matt Brown [email protected] Security Mark Ampleford [email protected] Jane Fry [email protected]

To discuss our regional and international services please contact:

Scotland Liam hughes [email protected] Tim Sandwell [email protected] East Matt Crocombe [email protected] Pacific Russell Bunker [email protected]

North America Daniel Close [email protected]

Corporate GovernanceRecruitment

Mid Year Market Report 2012

Corporate Governance

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