eFinancialCareers

Banking’s equivalent of the health and safety brigade.

If you want to work in compliance, you’ll need sound judgement and a respect for rules and regulations. Compliance professionals interpret the rules set by state regulators and ensure banks operate within them.

As well as interpreting the complicated and ever-changing external rules that these regulators lay down, the compliance function creates a system of internal rules to apply the regulations. It then communicates those to employees and makes sure they abide by them. The compliance function is usually split into teams. These include money laundering specialists, training specialists, monitoring specialists and advisory and product specialists.

Trends

Compliance departments already carry a big stick and, thanks to new regulations and a series of scandals, the stick is getting bigger.

First, the regulations: in 2007 the word is ‘MiFID’, or the Markets in Financial Instruments Directive. This is a complex piece of legislation designed to create a single European financial market, due for implementation in November 2007. However, an April 2007 poll by Handysoft, a business software group, suggested only four out of 10 firms would be ready in time.

When it comes to scandals, one of the big issues of the day is insider trading. In March 2007, the Financial Services Authority (FSA) said there was evidence of insider trading in nearly a quarter of company takeovers.

Anti-money laundering is also a hot topic, with banks and asset managers hiring specialists to ensure clients aren’t up to anything untoward.

Striking the right balance between regulation and laissez-faire is tricky. In the US, legislation in 2002 known as Sarbanes-Oxley tightened many compliance rules. Many bankers believe that New York’s financial services industry suffered as a result, while the City benefited from the perception that its regulatory regime is less onerous.

Roles and career paths

Jobs in compliance vary, depending on the area in which you work. If you opt for money laundering, you’ll spend your time on the look out for suspicious transactions. Money laundering teams check the identity of the parties involved and ensure the money came from a known and reasonable source. When the circumstances seem suspicious, money laundering officers report their doubts to the National Criminal Intelligence Service (NCIS).

The job of compliance training specialists seems tame by comparison. Training teams preach the compliance message to the bank’s employees. They create and present courses explaining what the rules and regulations are and why bankers need to respect them.

Monitoring specialists check that employees are behaving themselves. Traditionally the realm of junior staff, this role has seen much of its remit taken over by computers. As the head of compliance at one European bank points out: “Our staff send and receive about three billion messages every day. They could never be monitored by humans, but they are monitored by intelligent computer programmes that can spot unusual activities, such as dormant trading accounts that suddenly resurrect themselves.”

If monitoring is the least exciting category of compliance, working as a compliance advisor is the most exciting and usually pays the most. Compliance advisors interpret and apply the intentions of the regulator. An increasing number are product specialists who are situated on or near the trading floor. They tell traders whether or not a particular trade can go ahead and suggest alternatives that will be satisfactory to the client. Some, but not all, are ex-traders.

Compliance-specific graduate training schemes used to be rare, as were entry-level jobs. But banks such as Barclays Capital, Goldman Sachs and UBS now offer compliance training and more are likely to follow. If you don’t get on to a bank’s compliance training course, there are a few other options. One is to train with the FSA, which hires around 40 graduates a year for its two-year training programme. Another is to work for the compliance consulting arm of a Big Four accountancy firm. Alternatively, you could take a further degree: for example, London Metropolitan University offers an MSc in financial regulation and compliance management.

Pay

The best-paid compliance professionals are those who sit near the trading floors and advise on the issues associated with trading particular financial products. Salaries in this area rose 25% between 2006 and 2007.

Hedge funds are also notoriously generous to their compliance staff, with compliance pay in the hedge fund sector rising 30-40% in the past two years alone. A compliance officer with one to two years’ experience can now earn between £35k and £45k in salary working in a hedge fund, plus a bonus of somewhere around £14k.

Skills

In the past 12 months competition has increased dramatically. This means you’ll have to work harder to stand out from the pack. You can enhance your CV by studying with organisations such as the Securities and Investment Institute, where you can get a diploma in investment compliance. Another certificate is the Investment Management Certificate.

“The most important thing when you are at interview is how to really show your true potential. Having confidence without arrogance and a determination to succeed will be vital. You will also need to demonstrate a willingness to undertake the mundane tasks as you gain your experience,” explains Zoë Breadman, managing consultant, compliance, at recruiter IMS Selection.

You’ll need to be intelligent, methodical and not afraid to speak your mind, David Kemp at ABN AMRO points out: “We need people with the confidence to stand up to people in the business and remind them of their duties. This can be difficult. For example, when an investigation is being conducted, compliance staff might sit in judgement of people on the next desk.”

At the FSA, Jessica Adams on its recruitment team suggests that, while graduates from any degree discipline are welcome to apply, you will need a 2.1 or above.