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In this conversation with an executive at a compliance recruitment firm in the City of London, we identify the European countries from which compliance recruitment business drifts in to the UK, the backlog in authorisations at the Financial Conduct Authority, and the phenomenon of small – and not so small – payments firms coming to the UK under the regulatory umbrellas of the big banks.
VIXIO asked Bradley Handelaar, a senior associate at the City recruitment firm of Danos Associates, about these topics.
Q: What countries outside the UK do you see dealing in payments as a City recruiter?
A: Payments are really big in Belgium for some reason. A number of these countries are strange. Malta is another strange one. In Malta, the gambling side of things is huge, gaming is another one. We're having scrutiny on firms out there because there are so many being developed and coming about. I think a number of these firms have offices in Lithuania, which is random. I think I've seen some in Sofia because they're much cheaper offshore locations and you still get quite good talent out there as well.
These are the locations where you have to look for further support outside the country. In Scandinavia, there's not a huge pool of people. [International banks do not look at Scandinavia and say] right, we're going to have to do an international move over here and convince someone that they can move over here and make enough money and have a good way of life. There's not a huge pool of people there, whereas London is such a hub that there are already so many people there, or they can easily get there. There's an unlimited amount of talent.
Q: You would expect, wouldn't you, that people making international moves in compliance would be going to places like Luxembourg and Ireland, or coming from them?
A: There are a number of international moves out to Luxembourg. Again, it's such a small pool of people. If you speak to people who work out there, they live in France and Belgium. They live all around it instead of actually in Luxembourg. It's very easy to do. In Europe, Germany and the Netherlands are the busiest areas. That's right across banking, asset management and payments as well.
Q: Have you observed any recent trends in the difference between what's happening at the top in the compliance job market and what's happening on other rungs lower down?
A: You go through shifts. Sometimes when you are working on these MLRO [money laundering reporting officer] and heads of compliance roles, you tend to see them popping up in a number of places and then obviously when you tend to work on the more junior end with financial crime roles, you tend to see them pop up not just at one company but also at other companies. I would say in recent times it's right across the board.
As these firms are growing, they are growing their teams...and then they need to change to more senior people at the end to deal with that. I wouldn't say there are particular trends, I would say that the whole market grows and there's mass hiring needed across this space which is why it's been so busy.
Q: Mass hiring needed, did you say?
A: I'd still say yes. It’s very much needed as these firms are growing. A number of these firms are coming across to the UK now. I think they've delayed it with COVID and they're coming across and working through other companies, so for example some of these more retail banks, investment banks, they're investing in these firms. They give them money and assistance and they come across and get the authorisation they need. As I said, those figureheads, interim MLROs and heads of compliance, we've had to do those in the last 18 months and now we're helping them grow teams below these people. But in turn, as I said, that then leads to that next step happening where we need to replace the MLRO or the head of compliance with a permanent person who knows what he's doing and who now can manage teams.
Q: So these firms are being brought in from abroad by the big banks and presumably they work under the banks. Do the banks "white-label" their products and services as their own?
A: Yes, effectively so. The companies do not come to us saying “we are this bank”. They're saying “we're backed by this bank and they're helping us get the authorisation but we do our own thing and grow our own product here”. Nearly every single day I come across a new kind of payments or crypto-fintech firm that I've never even heard of before. It's just amazing how many there and how big some of these firms are. Some have hundreds of people already. Some of them I’ve never heard of and they've only got five people, so I keep an eye on them and watch them grow.
Over the last five to ten years, I have watched someone like a Monzo and a Revolut and a Starling go from quite small things to these multi-billion-pound companies. They've grown so quickly...I think that's why everyone jumped on the bandwagon and it's become such a competitive saturated space that it has to be as scrutinised, as it is now, by the Financial Conduct Authority (FCA) because there are just so many firms running wild.
Q: So all these little firms that come in under the umbrella of the banks — do they all end up being regulated by the FCA?
A: Yes, or the idea is to be. A number of them can go without it. They just get the licences they need to trade, they don't need to get FCA-approved. But a number of them, if they want to take it to the next level and depending on how big they want to be, then go through the FCA authorisation route.
But there is a massive backlog with authorisations at the moment. I know a number of them who are trying to get it. Even the FCA are in need of people to support them because there are so many firms trying to get approval and so many people within those firms trying to get approved. You're not just approving the firms, you're authorising the directors, the MLROs, the chief risk officers, the chief compliance officers. A number of these firms want to be authorised and regulated, but just aren't yet.
Q: Is that for the Senior Managers and Certification Regime (SM&CR)?
A: Yes. So it’s for both. It’s for the firm itself to be FCA-approved and for the senior managers.
Q: This is for payments firms.
A: Yes. I'd say for both.
Bradley Handelaar is a senior associate at Danos Group, which provides financial service firms with compliance, risk and legal professionals.
