In early May, a Financial Times headline announced: “Compliance staff enjoy pay boom as demand for expertise rockets.” The article detailed examples of headhunters helping compliance staff switch jobs, gaining on average pay rises of more than 20 percent. Other compliance staff were receiving counter offers to stay put and getting pay rises for not moving. Regulatory overdrive, especially in the banking and financial services sector, was driving this “staffing up.” And Brexit was making it even more difficult to retain compliance professionals.

The article cited data from LinkedIn showing that “while the number of compliance job ads in the investment industry rose 65 percent in London between the beginning of 2015 and the end of 2017, the rise in Luxembourg was sixfold and in Frankfurt fivefold.”

Much of the evidence in the FT article was anecdotal, but a close examination of two salary surveys covering compliance professionals in the United Kingdom and Europe confirmed some of its findings. According to the Robert Walters Salary Survey 2018 Europe, in general, banks and financial services firms continued to “bear the brunt of heavier regulation.” Strong demand for regulatory and compliance was expected to be sustained in 2018, “along with salary increases for these sought-after professionals” across the entire economic area.

More particularly, salaries for other professionals were largely stable, but not for compliance specialists within financial services in the United Kingdom. Recruitment levels started climbing from the beginning of 2017, driven by regulatory deadlines such as MiFID II, creating demand for staff with experience of wider international regulations as well as in the United Kingdom. 

Compliance officers working in surveillance and advisory saw the highest demand, but “there were ongoing vacancies in the regulatory change, central compliance and regulatory management/policy space.” Investment banks were also keen to employ specialists with U.S. regulatory experience. “Compliance professionals,” read commentary in the survey, “particularly at the senior level, were aware of the acute need for their skills and were prepared to leverage this to secure lucrative salaries.” Once MiFID II is in place, however, salary growth will likely diminish and employers can go back to competitive hiring, using “the work-life balance available with a role” as a recruitment tool rather than straight cash.

Finance was not the only sector to see high demand and higher salaries for compliance staff. In private legal practice, demand for risk and compliance professionals will remain high because of regulatory pressure. And law firms have switched to hiring anti-money laundering (AML) analysts rather than straight lawyers to manage this area of their business. Staff in this area will see the strongest wage growth as well as risk lawyers/analysts in legal services.

”To recruit the most highly sought after and skilled staff, as recruiters we need to specifically target certain profiles and individuals – particularly at the mid to senior level. As a result, more often than not, we use headhunting techniques to find the required talent.”

Chris Henson, senior manager, Robert Half’s compliance practice

The Robert Half 2018 Salary Guide only predicts small salary rises, however, of around one or two percentage points. In an interview with Compliance Week, Chris Henson, a senior manager in Robert Half’s compliance practice, gave further details about trends in compliance salaries. He said that there had been a big spike in salaries four to five years ago due to a wave of FCA regulatory change that swept the financial services industry following the financial crash. This brought the compliance function to the centre of business. 

“As a combined result of the additional layers of regulation and the remediation projects required to fix historical issues, companies embarked on a recruitment drive to secure both contract and permanent staff en masse to tackle implementation projects and monitor the resulting frameworks,” Henson said. “All this happened at a time when talent demands far outweighed supply, and companies faced increasing pressure from the FCA in terms of punitive fines. As a result, skilled compliance professionals were at a premium, and as day rates for contract workers rose, so too did permanent salaries as companies were vying for the available talent.” 

This rise in salaries, he added, diverted many candidates from more traditional law positions to compliance as “an exciting, high profile and viable opportunity.” Thus, shortages, though still present, are much less severe, though there are still a lot of candidates moving roles. Salaries are increasing, but at the more moderate pace showed by the survey. Over the past couple of years, these candidates have now gained experience, and thus the supply shortage, although visible, isn’t as pronounced as it once was.

Commenting on the FT’s descriptions of poaching compliance staff, Henson said: “It is common for a role to require a certain technical skill-set which may not be available amongst those actively looking for jobs. Many of the highly-skilled candidates are well paid in their current roles and may only be ‘passively’ looking, i.e. they are relatively happy but open to the right opportunity should it present itself. To recruit the most highly sought after and skilled staff, as recruiters we need to specifically target certain profiles and individuals—particularly at the mid to senior level. As a result, more often than not, we use headhunting techniques to find the required talent.”

In order to poach staff, salary increases offered are in the 10 percent to 15 percent range. But it is not always money that is the driving factor. “For example,” said Henson, “at the controlled function level, Head of compliance/MLRO professionals are assessing the risk associated with the company (including their own personal risk) and basing their decisions accordingly. An example would be someone moving from a wealth management firm, with a discretionary investment management model, to a firm conducting advisory work; they inevitably would deem that a higher-risk role. In many cases the greater the risk, the higher the salary demands. Often compliance professionals will consider a role that pays the same (or sometimes less) due to there being a lower associated risk with the firm.”

Firms that are the object of headhunters are defending themselves, however, said Henson, with usually a higher salary than the offer, or, in some cases, a promotion. 

Henson said that the largest pay raises directly correlate to the amount of responsibility and associated risk (especially in a controlled function role). “The Senior Manager Regime has brought additional personal risk to some functions, so those at the ‘head of’ level will look to be remunerated accordingly. The Senior Managers Regime has been rolled out in the banking sector and will hit other areas of financial services in the not too distance future, so senior compliance professionals across the sector are assessing their own risks.”

Those compliance positions that are among the most in demand are at the controlled function level, described by Henson as a “war for talent.” “There have been many newly created roles at the mid-level (compliance monitoring roles paying £45-55K [U.S. $60-73K]). Many small firms that had previously outsourced their compliance needs to a consultancy have grown to a size whereby they need to bring the function in-house. This is creating a host of new compliance monitoring roles. Added to the back-filling of roles when people leave, this has created a huge demand in the market.” Teams are also getting larger in bigger companies as senior compliance heads have more advisory duties, meaning actual compliance monitoring needs to be done by someone else. This has created further demand as they bulk out their teams.

“By industry,” he said, “spread betting firms continue to struggle to find senior level talent, largely the result of the high level of risk involved in the company and role. The rise and expansion of FinTech firms is also creating additional demand in this industry sector.”

Finally, he said, GDPR had created a host of new roles across a variety of industries as project work with contract staff moves in-house. “A[nother] new growth area for roles (and salary increases) is outside of financial services where businesses are building their compliance functions. This is most noticeable in the legal, property, and accountancy businesses.”

Like the data from LinkedIn, the Robert Walters survey predicted even fiercer demand across Europe. For example, in France, demand was high because businesses were responding to changes in French labour laws. And again, banking and private practice were the areas that saw the highest levels of demand, though salaries will see only modest growth of around 2 percent, with the top end of salary ranges up by €5,000 (U.S. $5,850) per year, with concomitant increases for interim staff.

In Ireland, financial services was again driving demand for compliance and regulatory professionals. Here, too, candidates moving jobs frequently made counteroffers a popular strategy to retain staff. Data protection and GDPR were drivers in this case, with skills in these areas commanding high salaries. As Irish, European, and U.S. regulators continued their focus on finance, professionals with experience in AML, financial crime, conduct risk, consumer protection, and MiFID II also saw increased demand. As in the United Kingdom, retail banks and insurance firms “focused on bolstering their consumer protection compliance functions,” said the survey. Candidates with multiple opportunities were so common that firms had to make hiring decisions very quickly. The most significant salary rises were for AML and data protection officers.

In the Netherlands, it is the same story: There is little demand for most staff, except compliance, again driven by new legislation. And shortages made the market candidate driven, with the highest demand at entry level. Salary rises in 2018 were even higher in Holland, with ranges up by €10,000 (U.S. $11,700) per year in some cases. Similar levels of demand were seen in Belgium and Luxembourg, though without driving the same kind of salary growth.

German banking and finance companies saw the same kind of regulatory pressure driving demand for compliance specialists, “particularly from consultancies and the regulatory departments of banks,” according to the survey. Again, compliance and—in this case—audit specialists saw the highest salary raises of any staff, with salary ranges both at the top and the bottom increased by €5,000 (U.S. $5,894) per year.

In Switzerland, data privacy and compliance were the only skills that saw salary increases, especially for candidates who could demonstrate a combination of technical regulatory knowledge and an understanding of digitalisation.