2017 Hong Kong Compliance Update - Q2 Overview
The responses to our 2017 Compliance Salary Survey made for more positive reading than we anticipated in Q4 2016. Compliance department heads in Hong Kong report they are still under staffed and are committed to recruit more compliance professionals for the rest of 2017. The compliance recruitment market has recovered from a slow Q4 2016, with Q1 2017 being a period of catch up following some of the recruitment freezes being lifted. There is a growiing trend of demand away from top tier investment banks to the wider financial services industry including the emergence of new providers such as Fintech companies and other mid-size financial services groups. While compliance professionals with highly specific skills remain scarce and in huge demand, there is a strong desire to promote internally and backfill the junior vacancies.
Fintech companies currently offer various types of financial products including loans, mortgages, and payments across digital banking, foreign exchange and more. As regulators such as SFC continue to focus on compliance, there will be a steady increase in the number of roles over the next 12 to 24 months.
A further source of demand is from the insurance sector as it comes under greater regulatory scrutiny. They will continue to drive demand following the once dominant banking sector. The insurance authority will need to hire experts in the region to assist with this matter. This will mean tighter rules set in place as the regulations enhance protection to the policyholders from the mainland and Hong Kong.
Retail and Private Banking
Banks will try to avoid costly compliance failings by hiring more staff and continue expansions of their KYC/AML teams. Growing belief amongst industry insiders is that compliance needs to be understood as an attitude and a culture, not just as a departmental function. AML and Products Compliance specialists will continue to be in high demand for the remainder of 2017.
Traditional Asset Management/ Hedge Fund/ Private Equity
In 2016, the SFC proposed to enhance asset management regulation and point-of-sale transparency to augment the regulation of the asset management industry in Hong Kong to better protect investors’ interests and ensure market integrity. In response, hedge fund managers/ private equity firms have been expanding their compliance capabilities. The demand for regulatory compliance professionals in hedge fund/ PE has been increasing especially within Chinese-based companies. We see higher headcounts in AML compliance within the traditional asset management fund houses this year. Given the lack of AML professionals in the asset management industry, this is a highly competitive niche area to secure employment in.
Recruitment in the investment banking market has slowed due to the decrease in recruitment from the larger banks. As banks’ costs are cut, this sector has become very vacancy focused with most of the vacancies relying on direct sourcing. However, the market’s compliance space remains very candidate led. We also see an increase in demand on hiring compliance specialists in Chinese Banks.
Forecast for Q3 and Q4
Overall, the rate of placements will continue to increase, due to the shift in demand away from well-established banks into smaller financial groups. The small to mid-size firms go to the recruitment market because they need to recruit and their processes are usually streamlined and effective. In comparison, the larger banks might be at risk to recruit for best talent because there are more interviewers during the hiring process and more layers of approval for any potential offers. In addition, these smaller firms are able to attract talent with both broader nature of the roles and great compensation packages.
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