Changing the Bonus Culture in Banking

Careers prospects in banking have changed in the banking industry over the last decade in the UK.

Formerly, all bankers wanted to be investment bankers, or hedge fund managers, or traders. They were seen as the glamourous end of the industry, seeing the most activity, prospects, money and reputation. The back office functions, such as secretarial or administrative, were not as attractive to the best and brightest bankers. In a few short years, how things change.

As a result of many scandals in the banking sector, and amidst great public condemnation, the government has imposed a great many regulations and legislative checks upon bankers. The Financial Conduct Authority (previously the FSA) has been keeping a watchful eye on banks and bankers’ actions- with the EU and current financial issues with the Eurozone fiscal adding to this new culture of restraint and checks.

This has brought about a shift in banking culture. Although the front office traders an investments bankers still have great job satisfaction and prospects, the mood there (including in career prospects) is somewhat muted. It is in the traditional back office functions that the greatest changes has been seen. In the wake of increased oversight, the role of the compliance department had become more important. From being an often overlooked bank department, the compliance department is now crucial as all financial transactions and deals have to be checked by them to ensure that banks’ actions are in line with regulations.

As the importance of the compliance department has risen- so has compliance as a job. The more regulations imposed by the FCA, Whitehall or Brussels, the more jobs open up for compliance experts, and the more vital their knowledge and expertise becomes. Compliance departments are growing in size, and are now staffed with specialist financial professionals who are experts in the area of financial oversight.

Recruitment consultants have notice the change. Most hedge funds, for example, have hired a compliance professional to fulfill a role that was usually performed by the chief operating officer. There has been a steady rise in the number of jobs in compliance – one recruiter notes a rise of 16.5% in insurance based compliance vacancies alone.  Also, the compliance industry has seen a rise in salaries coupled with a shortage of candidates; see compliance roles at Randstad.

According to the Black Swan Group, compliance is now seen as a respected financial career in its own right, with many graduates choosing it an initial financial career choice. Large financial institutions now have graduate schemes in compliance, and many mid- tier institutions have now followed suit, such is the importance of compliance professional. Graduates are now strongly advised to complete one of those schemes, or to have a detailed technical knowledge of regulatory related areas.

Indeed, another of Black Swan’s findings is that compliance is not just for graduates. The recruitment company has seen many lawyers, auditors or front office bankers move into compliance. Candidates for compliance jobs now often have accountancy or legal qualifications, or backgrounds in the financial sector such as risk management,  investment banking or similar. Candidates often have a background in risk in investment banking or an accountancy qualification, or a background in project management. Recruitment consultants are now stressing the specialist nature of the role.

As regards future prospects, the future is bright for compliance. According to Badenoch & Clark, hiring for compliance based roles has risen dramatically over the last year, and continues to do so. A survey carried out by recruiters Robert Walters found that many compliance professionals were in line for a pay rise this year- despite public and governmental pressure for bankers’ salaries to be cut down. Despite pressures on recruiting in the financial industry, the mood concerning compliance jobs is optimistic.

The financial industry has criticised the mount of regulations and oversight of their actions. However, such oversight shows no sign of stopping- rather, it is increasing. While this trend increases the cost of doing business for banks, and makes doing business more complicated and convoluted, it has proved to be a gain for the compliance department. As the skill and importance of compliance increases in this age of banking oversight, it is proving to be a rewarding and fulfilling career for the right candidate.


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… and the latest on the PPI claims scandal is?

Well, news broke a couple of weeks ago that Lloyds were rejecting genuine PPI claims in the hope that the claimants would not take the case to the FOS and more worryingly, telling their staff to ignore the possible cases of fraud by their peers. Shocking? Well no not really! Those working in the PPI claims industry have been complaining about this for a while now… it’s just that it’s now become public!

Told to Ignore Fraud

Having taken on staff to handle mis sold PPI claims, provided by a third party – in this case Deloitte, it seems that there have been various misdemeanours occurring within the call centre, and they have been uncovered by an undercover journalist working for The Times. This is not what Lloyds needs at this moment.

The journalist concerned posed as a worker within the call centre and reported that staff in training there had told him they were instructed to overlook possible cases of fraud. Furthermore, they were also told that most first-time callers would not follow up claims, in an apparent attempt to deter them from encouraging claims. The contract with Deloitte has since been terminated after Lloyds Banking Group was forced to apologise, although Deloitte insists the reason was not linked to the story in The Times, but to Lloyds choosing other providers.

FOS Receives Record Complaints

Also in the news is the latest statement from the Financial Ombudsman Service (FOS) which has been receiving a record number of complaints involving financial products of late. Indeed, the FOS is so stretched that is dealing with 7000 complaints every day, and is set to take on upwards of 1000 staff in order to deal with the backlog. It dealt with over half a million complaints regarding mis-sold PPI in the last year, a vast increase on the previous 12 months. The reasons for the increase are many, but the High Court’s instruction that banks must repay all mis sold fees will have had an effect.

Complaints Continue to Flood in

The rise in numbers of people claiming, coupled with the banks threatening to impose a deadline (now unlikely to happen) has meant many more people have been coming forward to make a claim much to the delight of PPI Claims Companies like PPI Claims Adviceline.

Claiming may be easier than ever but with the lenders seemingly still attempting to stall on claims it may make sense to use an expert to handle your case, especially if you are unsure of the procedure.

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