A regulatory tsunami great for accountancy candidates Viewpoint careers advice blog

A regulatory tsunami â€" great for accountancy candidates New regulations in the banking sector are coming so thick and fast that companies are struggling to keep up. For regulatory/compliance experts and graduates, this is resulting in enhanced career and salary prospects. Before Basel 3 â€" the new regulatory standard for banks’ capital adequacy, stress testing and market liquidity â€"is even implemented, the financial services industry is bracing itself for Basel 4, with an expectation of even farther-reaching requirements. Plus, of course, the industry is dealing with both the Dodd-Frank Act and the European Market Infrastructure Regulation (EMIR). Post 2007: a new regulatory paradigm The regulatory and legislative landscape has been drastically altered by the 2007-08 financial crisis. To avoid a repeat of the credit crunch, regulators across the globe have worked on placing a raft of new rules on banks’ operations â€" ranging from increased capital requirements to tighter regulation of activities such as OTC derivatives. “Basel 3 is but one element of the multiplicity of regulatory reforms under way â€" the ‘more and more of everything’ approach to regulation. Banks need to consider the combined impact of all these initiatives, in addition to the impact of Basel 3 and of moves towards Basel 4, on their strategies and business models.” So says KPMG in its report on Basel 4. The global professional services firm believes the moves towards Basel 4 have three major implications for banks: Higher capital requirements The need to improve capital management A less risk-sensitive approach to both capital ratios and internal modelling, which could force banks to re-evaluate the balance between lower and higher risk businesses. Regulatory experts in short supply My colleague Kelly Fordham, a Director at Hays, says this represents many opportunities for recruits: “The constant requirements and change â€" take for instance the EU’s Capital Requirements Regulation and Directive (CRD IV) â€" has led to the need for increased teams, both in size and in scale, to ensure that they cover the strong internal and external demand.” She says this is an issue for all levels: “Banks need specialists in all areas, such as COREP (common reporting), FINREP (financial reporting), ICAAP production, capital reporting and forecasting. Regulatory is the one area of finance that is very candidate-led. The demand is hugely outweighing supply, with clients wanting people that don’t necessarily exist in the volume that is needed. There is a lot of competition for the best people. Salaries have started to go upwards and outwards of the bandings that are normally given, as banks have to go higher than the norm to ensure they attract the best and top talent.” Those that are most in demand are candidates from the regulators themselves and from the major consultancies. The major banks are typically offering them opportunities to move in-house with significant salary increases. “Regulatory policy is a big area of demand,” explains Kelly. “It is hugely specialist and demands those individuals from the regulators as they understand the rulebook. The people who understand the demand from Pillar 1 to Pillar 3 [of Basel] for instance are rare. So too are those who understand the so-called calculation of policy.” As a result, Kelly notes that Hays is seeing “huge counter-offers” for individuals with prudential regulatory experience. In this context, even newly-qualified candidates with less experience of the regulatory framework, who would have been overlooked before the crisis, are now in demand. “What the banks are having to start to do is recruit people in the regulatory area, like newly-qualified ACAs (Associate Chartered Accountants) from the top four or top twenty firms; these candidates have a certain aptitude and level of education. We have recently placed graduates at entry-level roles as liquidity analysts, for example, as liquidity forms part of the wide regulatory picture.” Newly-qualified regulatory candidates are also benefiting from strong financial incentives. Kelly says: “Newly-qualified recruits within ‘normal’ finance roles such as financial accounting, management accounting, product control, would typically achieve around £50,000. We recently placed newly-qualified recruits going into the regulatory area at £58,000 to £59,000 at the basic level. That is quite a substantial difference.” Demand on the buy-side Demand from large banks is high, but recruitment activity from smaller firms in the financial industry on the buy side is also likely to increase. According to a December 2013 poll by theTRADEnews.com, 49% of respondents believed dealing with regulatory and compliance issues would be the biggest priority for buy-siders in 2014. With many new regulatory regimes set to be implemented this year, including aspects of Dodd-Frank and EMIR plus other regulations expected to be finalised, buy-siders are facing a significant compliance burden, the specialist publication points out. Kelly agrees, warning “At the moment there has been less focus on asset management from a regulatory perspective because of the size of those firms. The focus was initially on the banks, but this is now going to become a focus for smaller firms who will have smaller finance teams and less specialists to be able to cope”. Be part of the conversation. 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