HSBC's interim results are out. Aside from the bank's $378m provision for fines related to possible FX fixing, the big news is its continuing binge on control staff. Just a few years ago, HSBC had 1,750 people working in risk and compliance. By the end of this year, it expects to have 7,000. As the Wall Street Journal points out, this means that around one tenth of HSBC's employees are keeping an eye on the other 90%.
HSBC had good reason to splurge on risk and compliance. Back in 2012, it was fined a then-record $1.9bn for money laundering. That fine has since been eclipsed by BNP Paribas' $9bn fine for sanctions violations. Billion dollar penalties are becoming common in banking, but HSBC was burnt first. And it was one of the first banks to embark on intensive remedial recruitment.
Compliance recruiters point out that HSBC isn't the only bank trying to stem the tide with a barrier of control staff. "All the investment banks have been hiring compliance people on a massive scale," says Corinne Lennock at compliance recruiters Laurence Simons International. She cites HSBC and Barclays as among the big compliance hirers in London. Citi, JPMorgan and Deutsche Bank have declared their intention to add compliance types too.
Nor is the flow likely to change soon. "If anything, compliance hiring is increasing," says James Findlay, compliance and risk recruiter at Selby Jennings in London. "Institutions which have been fined are increasing their recruitment. So are hedge funds and asset managers which are subject to increasing regulation. And banks are adding staff to deal with new regulations - Dodd Frank alone is still driving a lot of recruitment."
Which are the top-paying jobs in compliance? Try regulatory roles, where compliance professionals help banks make sense of new regulations and implement any required changes. Try too, product-based compliance advisory jobs, where compliance professionals work with banks' traders, structurers and 'solutions' specialists to create products that please clients, that make money for the bank and that adhere to regulations.
The following table, taken from Laurence Simons' 2013-2014 compliance salary survey shows how much banking compliance professionals can expect to earn in salaries alone. As a vice president in an advisory role, you can earn a salary of up to £120k. Lennock says this will typically be supplemented by a bonus of 20% (£24k).
Compliance salaries in investment banks:
Source: Laurence Simons
So, how can you get one of these big-paying compliance jobs? Not easily. Lennock says demand is mostly for people who have three to five years' experience. You'll need detailed knowledge of regulation and if you want to become an advisory professional you'll need detailed knowledge of how those regulations apply to particular products, like equity derivatives. And if you don't? It helps to have a legal qualification, Lennock says. - Banks like to hire qualified solicitors or people with law degrees.
What about all the industry-focused compliance qualifications, like the CISI Diploma in Investment Compliance, or the Advanced Certificate in Compliance? Will those get you a job? It depends who you ask. Lennock says they won't make much difference. "They're not really recognized by the industry."
Other recruiters are more encouraging about industry qualifications, however. "It's definitely useful to have a certificate from an internationally recognized compliance body," says Stefan Hacker at Maywater Compliance. "Any of the compliance qualifications will benefit you," agrees Findlay, but he says you'll need to be prepared to come in at the bottom - maybe as a compliance assistant in a small asset management firm, earning around £22k a year.
What if you're an ex-trader or salesperson who wants to downsize into a compliance job? Hacker says there's demand for ex-front office personnel to work on particular projects like investigations into swaps mis-selling.
Senior compliance jobs are famously stressful. Hector Sants, Barclays' ex-head of compliance burned out within a year of taking the role. However, Laurence Simon's survey suggests that not all compliance professionals are working themselves to death - only 8% of respondents said they were working more than 60 hours a week. Equally, however, not all compliance professionals are earning the £3m pay packet Sants commanded before he quit. "It's still unusual to come across a compliance professional on more than £150k," says Findlay. Compliance jobs are hot. But pay is still far from on a par with the front office."