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Blog : BOARD TALK

Compliance : Challenges & Opportunities For Change

Posted on March 6, 2013 at 12:35 AM

There are not enough compliance officers - especially at senior levels - of the quality needed in the financial services sector.


The market is overheating as a result and pay packages are soaring by 50% for the best talent. All this against a background of "unparalleled change as regulatory and institutional shareholder pressures prompt a radical restructuring of the compliance function and a significant increase in average headcount."


So says a research paper just released by Hedley May, the risk, legal and governance search consultants. (Another welcome addition - established in 2009 - to the intelligent school of headhunting, from my brief exposure to them.)


It points out that over the past two years there have been as many as 28 changes to either global or regional head of compliance roles of global compliance functions across the 15 largest (non-Chinese) international wholesale banks - compared to only five changes annually on average in the years before the onset of the financial crisis in 2007.


People required for the job must be credible to regulators (difficult to find), convincing internally (tricky politics I would guess), and have leadership and change management skills (which has not historically been developed in this function).


Based on the findings of its research, Hedley May estimates "it will take five years to resolve the current situation." Oh dear.


The Hedley May insights are very useful. Here's one reason why -


They mention three "high profile and recent moves" - one of which is Hector Sants. The less said about that one, the better, in my view. And the others? Ruth Horgan moved from KPMG Audit to the role of global head of regulatory compliance at HSBC and Cindy Armine is global head of compliance at JP Morgan. 


Notice anything ? Both women. And a quick look at another sector shows that while there is the usual paralysis in the rise of female executives in the pharma and biotech industries, guess what ? That isn't the case in the compliance function, at least from a US perspective.


"There women are well represented in leadership positions because they are especially skilled at helping employees understand their legal and regulatory obligations, and meet them ―a critical expertise in a risk-averse industry." This comes from a blogpost by Ilyssa Levins at the Center for Communication Compliance (CCC), which makes for interesting reading.


So is the fact that, according to Hedley May, among the four areas banks are likely to look now for compliance heads is among lawyers - "an obvious pool to tap into" but HM says "the challenge is, and will be, to persuade lawyers that their career might be better served by moving into compliance." The onus on ensuring that compliance is an attractive destination, of course, lies with the plcs themselves.


A senior woman I interviewed said she thought it was very interesting the way men's stances on opportunities for women were reflected in whether they had daughters.....and a quick glance at some of the UK plc chairmen who have been most vocal on diversity would tend to support that observation. 


I see that Sir Roger Carr's daughter, Caroline Carr, who is in talent management at Goldman Sachs, has spearheaded a women's networking group which is chaired by Slaughter and May and has its own FTSE 100-based mentoring programme. Blue-chips everywhere.


Network for Knowledge is, as you would expect, low-key. By the look of things it is doing critically needed work for the future of the country's boardrooms.

Note: sorry, software is determined we are a day ahead of where we are....it's March 6, 2013. Working to fix.

Categories: Governance, Appointments, Compliance