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How Regulations Are Affecting Financial Services Recruitment

Date: 25 May 2015

The banking and finance industries have been in the news on a fairly regular basis in the last few years, with the financial crisis garnering a lot of public attention. This has, in turn, led to more regulations being introduced within the sector. We have been tracing these regulations and the impact they are having.

Background Checks

Reputation is a key concern for today’s financial sector. In an effort to improve the industry’s repute, we are seeing more rigorous candidate background checks taking place. Less than a decade ago, new employees could enter an organisation relatively easily. Today, however, this couldn’t be further from the truth. A number of banks will no longer issue a contract until a thorough background check has taken place. This could see an employer carrying out credit checks, scrutinising social media, and checking for evidence of flouting rules in previous roles when hiring a new employee. Although this gives added assurance to employers, the downside is that it draws out the recruitment process, meaning individuals may lose patience and look elsewhere.

Risk-less Candidates

But it’s not just background checks that are to blame that the search for the ideal candidate takes time. And what constitutes the perfect hire all boils down to risk (or rather, lack of it). Banks and asset managers now want low-risk candidates far more than they want those bringing in the big bucks, whilst wealth managers are looking for recruits who have a ‘safe’ client list – e.g. no tax-evaders, thank you very much. In short, today’s financial services want the recruitment process to be black and white, which means no more taking people at face value.

A shift in demand

As well as the industry’s reputation negatively affecting recruitment in the finance sector, lower budgets as a result of fines paid out by high-profile businesses due to regulatory non-compliance also means employment opportunities are suffering within certain sectors.  Furthermore, adding to the ongoing buy-side vs. sell-side debate, we are also seeing bonuses being paid in stock or over a three-year period in a bid to reduce movement across firms, as well as greater regulations in major investment banks and proprietary trading. The knock-on effect of this is that candidates are increasingly choosing to move from banks to hedge funds (where the risk limits are higher and scrutiny lower), or are going to work for US firms (where bonuses are paid in cash).

The question of location

The question of location has always been an interesting one within the finance sector. Particularly within Wealth Management, the traditional banking hubs of Switzerland, Luxembourg, Jersey and Guernsey are losing their appeal as stricter regulations come into play. Accordingly, we are seeing more interest in regulatory-light locations such as Barbados, Andorra, British Virgin Islands and Caymen Islands as more popular alternatives.

A new focus on customer service

With such negative press surrounding businesses involved in the sector, there is now a renewed interest in improving the customer service aspects of our financial institutions. A dip in customer trust has led to the need for better customer service, which is filtering through not only into general customer service personnel, but also the need for better customer service systems. This means fin-tech candidates are experiencing an unexpected rise in the number of opportunities, as the need for better systems becomes more of a focus.

Demand for Fixed Income, Rick and Compliance Professionals

Whilst increased regulations and uncertainty in the market may be affecting recruitment budgets and job security, thus having an impact on recruitment in the finance sector, a positive impact can still be seen. In fact, job vacancies at London’s financial services companies have risen by 52% in the last month, marking the fifth consecutive month of growth.

Banks across the world are seeking more fixed-income traders to help handle high levels of volatility in the market, alongside more compliance specialists and risk professionals. Over the last three months, we have seen niche areas such as bonds and currencies experiencing better-than-expected results for Q1 this year. This has seen some firms hiring complete teams (four or five individuals) rather than a single fixed-income trader.

Overall, quantitative risk has become a far greater focus for businesses keen not to lose money. This increased appetite for risk professionals reflects the sector’s desire to preserve its reputation and trade within defined limits and regulations. In turn, the spotlight falls on recruiters to hire quality individuals at the top of their game.

 

Regulation in the industry is, without doubt, having a fundamental effect on recruitment. For more information on recruitment opportunities in the finance sector, contact our recruitment teams today.

Tagged In: Selby Jennings
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