UK financial services sector in drive for profitability as economy recovers

• 80% of financial services executives said that their drive for profitability had risen over the past two years
• 91% reported that the regulatory environment is having an impact on their growth agenda
• Capital adequacy requirements are greatest inhibitor to growth for 38% of financial services companies

London, 5 December 2014 – The financial services sector is undergoing a significant drive for profitability, according to senior executives surveyed by specialist recruiter Robert Half Financial Services.  The research shows that the vast majority¹ (80%) agree that the drive for profitability had increased over the past two years.  However, despite the move to build profits following the downturn, the regulatory environment is having a noticeable impact on financial services companies’ ability to grow.  More than nine in 10 (91%) senior executives in the industry say that the current regulatory environment is having an impact. 

The main inhibitors to further investment into revenue-generating activities by financial services companies were capital adequacy requirements, cited by 38% of respondents; implementation of a governance, risk and compliance (GRC) programme (34%); regulatory reporting requirements (24%); and required investment in systems/technology upgrades (4%).

Financial services companies are hiring to service both the need to increase profits and the requirement to adhere to the more stringent regulatory regime.  Indeed, protection of the business appears to still outweigh new developments, with 56% saying that they are hiring permanent staff to deal with regulatory reform in what is already a talent-short marketplace.

Businesses are having to increase remuneration prospects to address the supply-demand shortfall, and regulatory specialists are seeing strong gains. Heads of Anti-Money Laundering (AML) / Know Your Customer (KYC) are anticipated to see base salaries between £95,500 and £195,500 according to the Robert Half Salary Guide. Regulatory accounting managers will earn between £83,250 and £119,750 in the year ahead of compliance managers between £65,000 and £100,000. Many companies are also increasing bonus offerings and providing sign-on incentives to secure the industry’s most niche and experienced professionals.

Neil Owen, Practice Director, Robert Half Financial Services said: “The financial services sector is one of the UK’s most important industries and its recovery is a barometer of economic resurgence – so it’s good to note the return of confidence and expectations for growth and profitability amongst senior financial executives.  However, executives also report that the tighter regulatory environment in which they operate is also impacting their ability to grow, with the need for capital adequacy requirements creating the biggest inhibitor to growth.

“From a recruitment and skills point of view, we are seeing changes in demand for roles that will support business growth as well as those that will help to support regulatory compliance and product development. Balancing both commercial and compliance priorities will be further challenged by the shortage of skilled professionals as companies raise salaries and benefits in attempts to attract the industry’s top talent.”

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Notes to editors

¹ The survey was conducted by an independent research firm and includes responses from 100 Chief Financial Officers and Chief Operations Officers at UK financial services firms.