Compensation and Market Trends

Interim Report 2015Compliance

Welcome to Barclay Simpson’s 2015 Compliance Compensation and Market Trends ReportBarclay Simpson has been producing corporate governance market reports since 1990. We use our Mid-Year report to update our Annual Report and as an opportunity to focus primarily on compensation. This report seeks to provide insight and guidance into compensation within compliance. This is supported by a comprehensive survey of compliance professionals registered with Barclay Simpson undertaken in June 2015. Clearly the approximately 500 respondents are not entirely representative, as they are compliance professionals who are registered with a recruitment consultancy and have taken time to complete the survey. There are no doubt many compliance professionals who go through their career without doing either. Nonetheless, the results make for interesting reading and comparisons with previous years provide useful insights into changing shifts in compliance. Comparable reports exist for all other areas of corporate governance. They can be accessed in section 6 of this report (“About Barclay Simpson”) or at www.barclaysimpson.com.

We place great value on the professional reaction to our reports and would appreciate your comments and any requests for further clarification or information.

BARCLAY SIMPSONCOMPENSATION AND MARKET TRENDS INTERIM REPORT

2015COMPLIANCE

01/ ExECuTIvE SuMMARY /102/ MARKET ANALYSIS /203/ MARKET COMMENTARY /304/ SECTOR ANALYSIS /405/ SALARY GuIDE & COMPENSATION SuRvEY /606/ ABOuT BARCLAY SIMPSON /24

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CONTENTS

Stable government positive for recruitmentAgainst expectations, post election the UK not only has a government, but a stable one. This is a positive development for those looking to participate in the compliance recruitment market. Another positive is a growing and increasingly profitable financial services sector. However, the cost of regulation is a major concern to the industry and one that has the potential to damage its international competitiveness.

Election a watershed moment? The election does in this respect potentially mark a watershed moment for corporate governance within the financial services industry. The governments Fair and Effective Markets Review (possibly in recognition that “bank bashing” had gone too far) is a mix of rigorous rules and sanctions concerning the accountability of senior bank executives, together with a collaborative code of conduct that will be overseen by a panel of market practitioners. Banks now need to properly manage their businesses, aware that the chancellor has spoken of a new settlement to end the cycle of fines, regulation and taxes. A further proposal, and one that will interest corporate governance practitioners, is that rules on individual responsibility should extend to the wider industry and include asset managers, brokers and hedge funds. Managers will potentially be fined or banned should failings result from the absence of proper controls. Clearly none of this is bad for corporate governance and the personal exposure of management will ensure that compliance recruitment budgets are properly funded.

Demand for compliance continuesAt the start of the year 87% of compliance departments anticipated they would need to recruit in 2015. Unlike other areas of corporate governance there is little doubt that demand for compliance expertise is still rising. There are two elements to this demand. First, new positions are still being regularly created, increasing the total number of compliance professionals employed. Secondly, compliance professionals are still changing job at a rate higher than usual. In fact 35% of respondents to our survey reported they had changed job in the last 12 months.

No unrestrained boom in salariesDoes this make for a boom in the salaries and compensation paid to compliance professionals? In spite of media headlines that might report otherwise, both our day to day experience and the results of our employment survey suggest otherwise. Although there are pockets where salary pressures are acute, they are by no means universal.

The average salary increase achieved by compliance professionals staying with their employer has risen from 7.7% to 8.3% in 2015 and for those changing job from 20% to 21%. These may well seem generous given that increases in real earnings have only recently turned positive in the wider economy. However, in terms of historic averages in compliance and when compared to other areas of corporate governance, the figures are not exceptionally high. A quick reality check would reveal that 50% of compliance professionals received a salary increase of under 5%, of which 15% received no

increase at all. A further 15% received the same or less when they changed job. Bonuses and other benefits that contribute to overall compensation are broadly flat.

Satisfaction with compensation risingPerhaps compliance professionals should not want to appear ungrateful for their relative good fortune. A trend in compliance, generally shared amongst all areas of corporate governance, is that increasing numbers of compliance professionals believe they are adequately compensated. The percentage reporting they are satisfied has risen from 55% in 2013 to 60% in our latest survey.

ExECuTIvE SuMMARY01

Banks now need to properly manage their businesses and keep within the rules, aware that the chancellor has spoken of a new settlement to end the cycle of fines, recriminations and taxes.

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MARKET ANALYSIS02

VACANCIES

vacancies still increasingThe number of vacancies being generated in compliance is still increasing. One reason is simply the creation of new positions. Growth areas such as consumer credit and payments provide new opportunities for those working in compliance as well as regulatory engagement, regulatory affairs / developments and policy roles. These roles reflect the way many companies are taking a longer term strategic view of their compliance functions and how they interact with the regulator. A second reason, and perhaps the reason why 35% of respondents to our survey have changed job is that after the Euro crisis in 2011, many compliance professionals who would otherwise have changed employer, thereby creating vacancies, did not. Once confidence returned in late 2013 a period of catch up began which is still continuing. This process will ultimately slow as in other areas of corporate governance.

There are currently high levels of competition for in-demand compliance professionals. Compliance is now benefiting from the recruitment of graduates and the establishment of compliance training programmes that have been developed over the last 2-3 years. Evidence for this from our survey is explicit with 17% of respondents reporting they had worked in compliance for less than two years against only 7% in 2014.

RATE Of plACEmENTS

Companies actively recruiting To provide a better insight into the dynamics of the compliance recruitment market, this graph plots the rate at which placements have been made across the last four years. The graph demonstrates the rate at which vacancies are being filled.

We reported at the start of the year that the rate of placements, having risen steadily for the last two years was continuing to rise. In the first six months of 2015 nothing has changed. It remains imperative for some companies to recruit and many are taking a realistic approach. If candidates with their preferred suite of skills are not available, they need to decide which skills they are prepared to negotiate on. If they are not prepared to do so then they need either to pay a higher salary or continue with an unfilled vacancy. Companies most likely to be successful are those prepared to be flexible, who adopt line management led recruitment processes, who are able to move quickly with minimal ‘touch points’ and are then able to swiftly make realistic offers. Often smaller, more entrepreneurial companies have greater success with these steps avoiding the sometimes slow, unresponsive recruitment processes of some larger companies. However, in spite of reports to the contrary, many compliance professionals, having worked in environments where costs have been aggressively managed and salaries kept in check, enter the recruitment market with realistic expectations.

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- Placement rate

- New vacancies- Outstanding vacancies

MARKET COMMENTARY03

Costs of regulation growThe financial crisis was a once in a lifetime event and “never again” was the common refrain. The banks, having engaged in reckless risk taking in the run up to the financial crisis and having been bailed out at staggering cost, were discovered to have subsequently engaged in market rigging and customer abuse, resulting in further scandal and fines. The regulatory costs of cleaning up the banks and making the wider industry fit for purpose has largely fallen to the individual companies in the industry. Legislators and regulators have produced whole rafts of rules and regulations which, given the level of fines, are being rigorously enforced.

Regulation hits productivity?If a criticism of the uK has been its lack of productivity then the financial services industry would be a good place to look for improvements. One of the major challenges is competitiveness and London has possibly slipped as a global financial centre. The huge waves of reforms and regulation have forced banks and companies in other sectors to weigh the increased costs of doing business. for some it is simply too high. Compliance professionals come at some cost and whilst their numbers are still rising, at some point it must stop. However, just as the huge swathes of conduct and regulatory rules are bedding in, prudential rules are likely to grow in significance.

A positive is that the new government appears to appreciate how vital the financial services industry is to the UK economy. The Fair and Effective Markets

Review hopefully sets the scene for a more collaborative approach to regulation.

Relocation an answer?One source of potential cost saving is to relocate compliance teams to lower cost centres outside of London. The ‘challenger banks’ are particularly well represented in the regions. Longer term this would be positive for the wider economy, spreading the talent pool more widely. In the short term it is creating problems as companies look to recruit in regions of the country, where the concentration of expertise required simply does not exist.

However, the Central Belt in Scotland, the North West, West Yorkshire and the West all have well established financial services industries. The comments section of our survey allowed a number of compliance professionals working in the regions to voice their concerns about the lack of opportunities. A chicken and egg situation perhaps?

Candidate availability improvesWhilst demand is increasing so is the availability of candidates. Immediately after the financial crisis graduate recruitment was curtailed which had up until recently resulted in shortages of candidates in the 2-5 years range of experience.

The good news, born out by our survey, is that industry initiatives to develop compliance as a profession, and one that is attractive to graduates, are bearing fruit. This additional resource is going some way to providing the expertise necessary to meet commercial and regulatory developments. There are now many more talented graduates choosing a career in compliance over and above other specialisms such as legal or audit.

Some commentsThe comments section of our survey identified some interesting and pertinent views worth reporting.

There is clearly some resentment that the responsibilities imposed by CF10/11 positions and the personal liability required is not always being properly recognised or the value and skills required to provide a high quality compliance officer. There is frustration, and it is certainly something we recognise, of the difficulty of moving between sectors. Whilst recruiters are often blamed, they most often are simply reflecting employer preferences.

A perfectly understandable resentment is when unproven compliance professionals are recruited on seemingly higher salaries than resident staff. We are well aware of the problems this can cause.

The ability to work flexibly and have greater control over when they work is clearly important to compliance professionals. There is a sentiment that as compliance professionals become more senior and better compensated, they become more satisfied with their compensation but less satisfied with the broader demands their position makes upon them.

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“The ‘challenger banks’ are particularly well represented in the regions.

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SECTOR ANALYSIS04

BANKING

This section covers retail, corporate, commercial and wholesale banking.

Demand from the banking sector remains robust. Growth areas currently include digital banking, payment services and consumer lending. Conduct specialists are continuing to move into the wholesale side to focus on the wider conduct of employees and how this affects customer outcomes.

As banks take a more strategic approach to compliance and regulation, there is greater focus on analysing regulatory developments and overall engagement. This is playing a key part in their strategy to deal with the avalanche of regulatory pressures they face. Larger international banks are putting in place global teams to co-ordinate their regulatory response to the jurisdictions they operate in. Effectively they are seeking a common standard and then tailoring their approach to meet the demands of specific jurisdictions. This is perceived as an efficient and cost effective approach.

Challenger banks are steadily growing their teams. These roles are often attractive propositions offering high salaries and less hierarchical management structures. International banks operating in London but based in jurisdictions with lower standards of regulatory scrutiny have been scrabbling to meet the standards required in the uK and have recruited a number of CF10 positions.

Financial crime as a discipline is continuing to grow. It is most recently being driven by a change of approach by the fCA in their annual business plan released in march 2015. A notable observation of the plan is that financial

crime replaced house price growth as a top risk consideration. Additionally, the FCA has placed a special focus on combating money laundering, bribery and corruption.

The pattern of operational risk candidates migrating into financial crime focused positions, particularly into hybrid financial crime risk framework related positons, is continuing. AML transaction monitoring candidates remain in high demand, particularly those with strong system and process improvement skills. As financial crime advisory functions continue to grow candidates with strong technical knowledge, excellent stakeholder management skills and recent global experience are in particularly high demand. Sanctions remain a key area within financial crime as a result of their increasing use, especially by the European union towards Russia. As a consequence, there has been an increase in regulation and further high profile fines. Most financial crime functions remain in london, although we are starting to see a number of Tier 1 banks looking to move their functions away from london and into regional centres.

INVESTmENT

This section covers asset management, wealth management, private equity and hedge funds.

Demand in the sector remains strong. Investment management companies now recognise the need to recruit effective compliance professionals and specifically those who possess the necessary combination of academics, soft skills and technical experience who can help engender the right compliance culture within a company. They want candidates who understand that compliance should be solutions based.

There is recognition within the sector of the need to mimic banks by taking a longer term strategic approach to compliance. Companies in the sector understand that regulation has become globalised and they require compliance professionals with experience of international regulation and specifically the SEC. Asset managers with a global reach but who do not have the resources of larger multi-national companies are looking to their compliance functions to advise on regulation across different jurisdictions. Some are seeking to gain an advantage by employing technology. Compliance professionals that can advise the business and employ automated compliance systems to more effectively meet regulatory obligations are expected to be in demand moving forward. It is something compliance professionals should recognise and embrace across all sectors.

MiFID II is continuing to create challenges as companies review their costs and methods of product distribution.

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As banks take a more strategic approach to compliance and regulation, there is greater focus on analysing regulatory developments.

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Companies have become sensitive given their cost disclosure requirements. They need robust systems and controls to ensure they meet their stringent regulatory requirements particularly regarding distribution networks and the suitability of the advice they provided.

Much of the demand for compliance professionals is coming from larger companies who are better able to absorb the costs of compliance. Smaller and medium sized groups often recruit more tentatively, although they are often more appealing to work for given their generally higher salaries and the greater diversity of experience they are able to offer.

Barriers into the sector remain high and frustrating for those compliance professionals without the required experience.

MarketsWithin the markets sector, surveillance candidates are in great demand and can currently command a premium. Product specific experience sought includes Fx, FICC and equities. At senior levels experience of front office activities is invaluable.

There are still questions surrounding MIFID II and its effects on the brokerage sector. However, as a result of the additional requirements around trade transparency it is likely that new software and IT skills will need to be developed. As IT and compliance functions start to work more closely together, new hybrid roles are likely to emerge.

The cost of regulation is having a substantial impact on the sector leading smaller brokerages to review their businesses. Decisions are being taken on which areas to focus on and which to either close or divest. This is

affecting compliance teams, especially in Advisory and Trade Surveillance that directly support the trading desks. Compliance functions are also being merged and divided which is causing uncertainty amongst the affected compliance departments. However, as traditional brokerage companies look to diversify their offering, compliance teams are being established to support the new lines of business.

Some businesses that have not previously been regulated are now establishing compliance functions. Examples include proprietary trading companies. Their preference is usually for compliance professionals with entrepreneurial flair and strong commercial awareness who can ensure that regulation works with rather than against the business.

Insurance Many insurance companies grew their compliance functions in 2014 as they migrated towards the three lines of defence model common in banks. larger insurers are moving towards a business partnering approach, with compliance advisory teams providing underwriters with first hand advice.

As the sector is subject to the senior managers regime, there has been interest in candidates with operational underwriting or broking experience for compliance monitoring roles. Retail insurance companies have looked to recruit consumer credit compliance experts as they fall under the consumer lending regulation implemented by the FCA.

Insurance as with the investment sector, remains a challenge for compliance professionals without prior sector experience to break into.

THE CONTRACT mARKET

Our survey suggests a generally positive picture, although in our experience demand for compliance contractors has been more subdued in 2015 than we anticipated, particularly given the strong second half of 2014. The market so far this year has been characterised by a steady stream of opportunities with pockets of strong demand for certain skill sets. Investment management has continued to utilise contractors and candidates with AIFMD and uCITs knowledge have been of most interest. MiFID is starting to impact compliance advisory requirements, with companies seeking contractors who can assist with assessing potential policy and procedural changes arising from the updated Directive. We expect to see more positions like this, with candidates familiar with both MiFID and its requirements having multiple options.The retail banks have also been active, with demand for more experienced contractors to help with conduct risk and regulatory change, such as the ongoing implementation of the European Mortgage Credit Directive (EMCD). The corporate and investment banks have also recruited numerous junior-mid level AML/KYC contractors, where large teams and above average staff turnover are driving contractor demand. Only 16% of respondents to our survey were not working, although they are more likely to report they are finding securing another contract more diffiuclt than they anticipated. However, the vast majority of those in work had found their current contract within less than three months. Only 18% of contractors working had accepted a reduction in their previous rate, 80% expressed satisfaction with their current rate and over 93% overall satisfaction with their contract.

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This Mid-Year Report includes a significantly expanded section on salaries and compensation, designed to give a much fuller picture of overall remuneration packages.

Most compliance professionals are keen to know their market worth. This is not always easy to address. Two otherwise similar compliance professionals may enter the recruitment market and accept materially different salaries. We provide this caveat because we are aware that the compliance recruitment market is sufficiently diverse that it defies simple categorisation. However, compliance professionals and their employers want guidance and this is what we attempt to provide.

As recruitment consultants, we are involved in the negotiations that take place between employers and prospective employees. We are aware that whilst salary is usually the most important consideration, a number of other factors go to make up total remuneration. In addition to the data we gather from the placements we make and the recruitment work we do, including contact with compliance and human resources departments about salaries and other benefits, we have also conducted a Compensation Survey to provide specific detail on all different types of remuneration within compliance.

The Survey was of compliance professionals registered with Barclay Simpson and was conducted in June 2015. It generated several hundred responses.

Covers both permanent and contract marketsWe also conducted an Interim Compensation Survey covering the contract market. We have incorporated the key findings into this report to make it as easy as possible to understand the full picture for compliance.

We hope you find the results interesting. This report provides the key highlights of the Survey. If you would like more detail about your specific sector or role, please call Tom Boulderstone on 020 7936 2601 (tgb@barclaysimpson.com).

This section is broken down into 4 parts:

1. Key conclusions – Key conclusions from Compliance Compensation Survey

2. Overview – Commentary on the major trends in salaries and other benefits paid to compliance professionals

3. Compensation survey – Results of Compensation Survey completed by compliance professionals

4. Salary guide – Guide to salaries for specific compliance roles and positions

SALARY GuIDE AND COMPENSATION SuRvEY 2015

05Compliance

Number of people working in compliance is growing p Average time compliance professionals have worked in

compliance has fallen from 9.5 years to 8.9 years in 2015

p Only 62% have worked in compliance for over 5 years compared, with 75% in 2014

p 39% of compliance professionals are women, the highest in any area of corporate governance, although there was no increase over the last year

Buoyant recruitment market p 35% of compliance professionals have changed job in the

last 12 months

p 62% of compliance professionals moved for career development reasons

p 2% of compliance professionals are not working, down from 3% in 2014

Salary increases broadly in line with 2014 p 21% average salary increase of compliance professionals

who changed job in the last year. up from 20% in 2014

p 8% salary increase for compliance professionals who stayed with their existing employer

Compliance professionals becoming more content with their remuneration p Overall 60% of compliance professionals are content with

current remuneration versus 57% in 2014

p Rises to 79% for compliance professionals who have moved in the last year against 51% for those who have not moved

p 61% of compliance professionals benefit from flexible working

p Average holiday entitlement has risen to 27 days

Value of other benefits flat Bonuses

p 91% of companies paid bonuses in the last year

p Average bonus equivalent to 19% of base salary. No change from 2014

pensions

p 90% of compliance professionals benefit from employer pension contributions

p Average employer pension contribution remains at equivalent to 9.5% of basic salary

long term incentive plans

p 22% of compliance professionals benefit from long term incentive plans

Other benefits

p 86% of compliance professionals receive other benefits

p Average value of additional benefits equivalent to £4,700

Contract market strong p Contracts being secured more quickly

p 80% of contrators believe they are adaquately compensated and 93% are satisfied with their current contract

p Quality of work becoming increasingly important

1 Key Conclusions

The results from the Barclay Simpson 2015 Compliance Compensation Survey confirm a buoyant recruitment market where the number of compliance professionals employed in the financial services industry continues to grow.

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Motivation for potentially entering the recruitment market This year we have gone on to ask what is the most likely reason compliance professionals would look for another job or attend an interview. The results are surprising. In common with our surveys of other areas of corporate governance salary has become a more important issue. However, in no other survey has it eclipsed career development in the way it has done in compliance. We suspect salary is a bigger motivation “post move” than compliance professionals are prepared to admit. In fact 66% of compliance professionals working in investment banking report they would primarily be interested in a move for salary reasons against only 23% who had actually moved.

If you were to look for another job or go for an interview, what would be the most likely reason?

Salary increases achieved by compliance professionals who stayed with their employer According to our survey, the average increase for compliance professionals who stayed with their existing employer was 8.3% up from 7.7% in 2014. It is the highest increase achieved amongst all the areas of corporate governance surveyed.

Which best describes your salary increase in the last year?

Motivation for entering the recruitment market This analysis looks at what motivated compliance professionals to change employer in the last 12 months. Career development as in other areas of corporate governance is invariably the most significant reason. Notably job security has fallen in importance and so has salary, with less than one in five compliance professionals having moved for salary reasons. Career development combined with a better work/life balance represent the overwhelming reasons compliance professionals change their job. It is interesting that in the comments section of our survey whilst dissatisfaction with salaries was raised, work pressures and increased responsibilities were far more common refrains.

There is generally little difference in motivations between industry sectors and specialisations or men and women. Of note were the 73% of compliance professionals working in investment banking seeking career development and the 86% of those working in insurance who had been motivated by salary against only 13% in retail banking. Surprisingly given the recent volatility in the sector, no compliance professionals working in investment banking cited job security as a motivation.

What was your primary motivation for entering the recruitment market?

In our experience whilst salary is not the primary motive for compliance professionals looking to change their job, most will almost invariably use the opportunity to better their salary. Last year, 74% of compliance professionals who had changed employer in the last 12 months were content with their salary, against only 47% who had not changed employer. This year, 79% of compliance professionals who have changed job are satisfied against 51% who have not.

2 Overview

In 2015 there are significantly more compliance professionals benefiting from gains in excess of 10%. This would seem to indicate that compliance professionals are more readily benefiting from promotions and buy backs when they have looked to resign or when companies are prepared to significantly increase the salaries of compliance professionals they perceive to be valuable. It is surprising, but broadly in line with other areas of corporate governance, that 15% of compliance professionals received no salary increase in the last year. Clearly for a number of companies cost pressures remain. Whilst most sectors were close to 8%, the exceptions are consultancy where the average rose to 12% and the insurance sector which was as low as 4%. It may go some way to explaining why 86% of compliance professionals working in the insurance sector were motivated to move by salary considerations.

Salary increases achieved by changing employerThe survey indicates that the average salary increase achieved by compliance professionals changing job is 21%, up from 20% last year.

This is marginally higher than other areas of corporate governance and is even higher than the 20% achieved by risk managers. There is a significant difference between the 21% increase in salary achieved by changing job and the 8% average achieved by staying with an existing employer. Changing job is clearly financially beneficial. Whilst 21% may be taken as the average, in reality there are a wide range of considerations that go into the decision to accept a position and, whatever the resulting salary increase, the results of our survey indicate it is unlikely to be the average of 21%.

Which best describes how your salary compares to your salary in your previous role?

It might seem curious that 15% of compliance professionals would move for the same or less which is only 1% down on 2014. For a few their job could be under threat or has already become redundant, for others it is the result of relocation, for example a move away from London (and in the case of increases a move to London) or perhaps the opportunity to work in a new sector or specialist area. Others are prepared to accept a better work life balance or those who are not seeking a bigger job but simply, in their terms, a better job – one that perhaps avoids the responsibility and stress that compliance professionals comment on. Equally, whilst base salary is the most compelling element of any offer, there are other benefits such as pensions, bonuses and holiday entitlement to be considered.

Conversely, 16% of compliance professionals received salary increases in excess of 40% which will include those moving from low to high cost locations such as London. There is clearly a need for compliance professionals with in-demand skill sets and particularly for those who combine them with commercial savvy and effective communication skills; and on some occasions companies are prepared to pay significant salary increases to acquire them.

The average increase by major specialism was as follows:

June 2011

June 2012

June2013

June2014

June 2015

22% 15% 17% 20% 21%

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Average increase by sectorInvestment Banking 8.0%Corporate Banking 8.1%Retail Banking 7.3%Private Banking 8.2%Hedge Fund 8.4%Insurance 4.3%Brokerage 8.4%Consultancy 11.6%Regulator 6.5%

Average increase by major specialismCompliance Monitoring 8.1%Compliance Advisory 8.0%Compliance Regulatory 6.8%Group Compliance 10.1%AML / Financial Crime 8.0%

Average increase by major specialismCompliance Monitoring 12.1%Compliance Advisory 24.4%Compliance Regulatory 24.15%Group Compliance 19.5%AML / Financial Crime 23.7%

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Salary v Remuneration Whilst base salaries always catch the headlines, offers of employment invariably include other benefits. On average, these additional benefits make up over 30% of total remuneration. Here is an overview of the other benefits that compliance professionals might expect to receive.

BonusesBonus payments were flat in 2015. 91% of compliance professionals reported they work for a company that paid a bonus which is unchanged from 2014. The average bonus paid in 2015 was reported to be 19%, which again is no different from 2014. Compliance has faired better than other areas of corporate governance where a decline in bonus payments has been common. Clearly in spite of compliance being an area where staff shortages can be acute, bonuses are being kept in check which may reflect a wider curtailment of the bonus culture. Of those who received a bonus, 39% reported an increase on 2014, with only 20% reporting a reduction. 82% of bonuses were paid in cash, up from 73% in 2014 and 22% benefited from a long term incentive plan, up from 15% in 2014.

The highest bonuses were paid in the hedge fund sector although both those working in retail banking and insurance were higher than average. This perhaps reflects their otherwise lower salaries. Brokerages, consultancies and regulators were significantly below average and possibly rather surprisingly, investment banking was marginally less than average.

Bonuses, whilst potentially a good way of retaining and motivating staff, are rarely an efficient way of attracting them. Bonuses are often non-contractual, and may be paid on the basis of corporate or personal performance, or a combination of the two. There can also be a qualifying period.

An issue with bonuses is that whilst a compliance professional entering the recruitment market who has benefited from a bonus may add it to their base salary, they are more inclined to discount bonuses when discussing expected salary. This goes some way to explaining what can otherwise be relatively high increases in the base salaries achieved by compliance professionals moving between employers.

Pensions Workplace pensions have become mandatory and companies are in the process of introducing them. The results of our survey indicate that 90% of compliance professionals report their employer offers a pension benefit, up from 87% in 2014. Our survey suggests a 100% provision for compliance professionals working in the insurance sector and regulators and only 80% provision in the brokerage and consultancy sectors. As a result of workplace pension legislation we assume the percentage will rise during the course of 2015 and approach 100% (as it should) in 2016. The average pension contribution made by employers rose from 9% in 2014 to 9.5% in 2015. Larger employers are generally more willing to pay higher contributions and managers stand to benefit from a bigger contribution.

The most likely employer pension contribution received by 40% of compliance professionals is 5-10%, with 65% falling into the 5-15% range.

For new recruits, final salary pensions no longer exist in the private sector. Those who still benefit from these appreciate how valuable they are and the cost of giving them up to join a new employer can be prohibitively expensive. Pension schemes in the private sector are invariably money purchase where the employer commits to making a contribution based on a percentage of salary.

Whilst there can be a short qualifying period before contributions commence, workplace pension legislation requires all companies to enrol an employee in a pension scheme within three months of employment commencing. For those who elect to stay enrolled, minimum employer and employee pension contributions based on an employee’s salary are now mandatory. Most companies pay above these minimums based on a fixed percentage of an employee’s base salary. The employee may or may not be required then to match it. Frequently employers will be prepared to match additional contributions made by the employee up to a fixed percentage. The percentage may increase with the age of the employee, their length of service or management status.

Other benefits86% of compliance professionals reported they received other benefits in 2014, with the average value of those benefits falling from £4,800 in 2014 to £4,700 in 2015. Managers are more likely to receive higher value benefits and larger companies are more likely to pay them. The sector where the value of other benefits is significantly higher is the insurance sector which perhaps goes some way, as with other non-salary benefits paid in the sector, to compensate for what are otherwise lower base salaries. Other benefits are lower than average within hedge funds and brokers.

Cars or car allowances have become less common. They can still be expected where a role requires significant travel and also for senior hires. In terms of overall remuneration, a car allowance is frequently offered in lieu of a car and is often considered as non-pensionable salary when evaluating overall remuneration. A more common benefit for those working in London is a location allowance. This is a supplement for those working in London to cover the increased cost of either living in or commuting to London. The most valuable other benefit is Critical Illness Cover which is expensive to provide and is usually restricted to senior roles. However, Private Health Insurance is common and is often extended to all immediate family members.

Life Assurance, usually linked to a pension scheme, is normal, as is payment of at least one professional subscription. Other benefits may include season ticket loans in London, gym membership, subsidised dental care, personal and accident insurance and staff discounts. These are generally low value benefits.

Flexible benefits This refers to schemes where employees are offered limited core benefits in addition to their base salary which is then supplemented by a benefits allowance. This benefits allowance can either be taken as salary or employees can choose to buy from a menu of additional benefits. These schemes became popular 10 years ago, particularly in the accounting profession, but have not been universally adopted.

Holiday entitlement The average number of days holiday survey-wide is 27 days up from 26 days in 2014. 36% of compliance professionals surveyed receive 25 days holiday, with 68% reporting between 25 to 28 days holiday. A similar result to risk management. Holiday entitlement, regardless of sector, is more likely to be enhanced by the number of years worked rather than seniority. As a strategy it represents a good way of rewarding loyalty and retaining staff, but a poor way of attracting new employees.

An increasingly popular benefit is to provide employees with the opportunity to buy extra holidays. This is usually limited to an additional 5 days and would be purchased through salary sacrifice.

Flexible working flexible working is becoming more popular. 61% of compliance professionals benefit from some form of flexible working, up from 56% in 2014 and 52% in 2013. It is most common in regulators (100%) consultancy (77%) and retail banking (71%). unlike last year compliance professionals who have changed job are more likely to be able to work flexibly. 65% of those who have changed job in the last 12 months benefit from flexible working against 60% who have not. There was no reported difference in the percentage of men and women working flexibly. Comments made by compliance professionals and other corporate governance practitioners make clear that flexible working is a highly valued benefit. It would appear that companies who are looking to recruit increasingly recognise this.

Employers are ultimately more concerned with output rather than simply attendance. Flexible working is an effective means of retaining staff and few employees once they have benefited from it would be prepared to give it up. We anticipate that this will ultimately become a more universal benefit.

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3 General Results

The composition of the sample ranged across all areas of compliance. Here are some of the key statistics:

Survey overview

p Proportion of women working in compliance is high compared with other areas of corporate governance

p Men have worked in compliance for an average of 9.4 years v 8.2 years for women

p 20% of women have worked in compliance for less than two years, against only 13% of men.Given this, the proportion of women working in compliance is likely to rise

p 57% of men have management responsibility against 47% women

p Those with management responsibilty on average have 11.2 years experience, those without 6.5 years

Q - How long have you worked in compliance?

General findings

p Average time in compliance is 8.9 years v 9.5 years in 2014

p 41% of compliance professionals have worked in compliance for over 10 years

Proportion of women likely to rise

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Q - Are you currently working?

unemployment almost zero

p Percentage of compliance professionals not working is low in absolute terms and is now lower than in 2014

p 57% of compliance professionals who are not working are finding it more difficult to find a new job than they anticipated

p No out of work compliance professional has been looking for longer than six months

Q - Have you changed employer in the last 12 months?

Q - What was your primary motivation in looking for another job?

Q - If you were to look for another job or go for an interview what would be the most likely reason?

Recruitment activity

p Compliance professionals are more likely to have changed jobs in the last 12 months

p Compliance professionals working in hedge funds / asset management are most likely to have moved against those working in insurance who are least likely

p Compliance professionals working in advisory are most likely to have moved against those in policy who are least likely

p Career development and work / life balance increasing in importance

p Job security becoming less of a concern

p Salary more important for compliance professionals who might consider moving

Increased level of recruitment activity

Difference in motivation before and after moving job

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Q - Which band best describes your base salary?

Salaries

Average base salaries

Sub-group Average salaryInvestment Banking £95,800Corporate Banking £95,400Retail Banking £88,700Private Banking £94,200Hedge Fund £91,900Insurance £84,300Brokerage £84,500Consultancy £69,700Men £85,200Women £77,100Overall average £85,065

Q - Which option best describes your salary increase in the last year?

Q - Which best describes how your current salary compares to your salary in your previous role?

Q - Overall do you believe you are adequately compensated?

Average salary increase 8%

Average salary increase for job movers 21%

Increase in satisfaction with remuneration

p 2015 average: 8%

p Average salary increase for those who stayed with their employer up from 7.7% in 2014

p 24% with increases of over 15% likely to be internal promotions or buy-backs

p Average salary increase for people moving jobs is 21%, up from 20% in 2014

p 72% of people moving saw increases of over 10%

p 15% moving for less or the same will include those moving for quality of life, defensive reasons or to re-locate

p 60% of compliance professionals who have changed jobs are satisfied. Rises to 79% of those who have changed jobs in the last 12 months against 51% who have not

p Compliance professionals become more satisfied as their salaries increase

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Q - Does your employer pay a bonus?

Q - Which of these as a percentage of your salary best describes your last bonus?

Q - What percentage of your bonus was paid in cash?

Bonuses

Bonuses almost universal

No change in level of bonuses

More bonuses paid in cash

p No increase in the number of employers paying a bonus

p Medium sized companies most likely to pay a bonus

p No difference between managers and non-managers

p Average bonus of 19% the same as in 2014

p 71% of bonuses less than 20%, so average being brought up by a small number of much bigger bonuses

p Small companies more likely to pay a bonus

p Average bonus 25% for managers, 12% for non-managers

p Significantly higher percentage of bonuses are being paid in cash versus 2014

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Q - Does your employer provide you with any pension benefits?

Q - What is the approximate monetary value of any other benefits such as health, travel or car allowances?

Q - What contribution to your pension as a percentage of your salary does your employer make?

pensions

Other benefits

Nearly all employers contribute towards pensions

Other benefits more common, but value down

Average contribution up to 10%

p Percentage of companies making pension contributions has increased in 2015

p 86% of compliance professionals receive some form of other benefits, an increase on 2014

p Value of other benefits has fallen back to £4,700 in 2015 from £4,800 in 2014

p Managers more likely to receive higher value other benefits

p Larger companies on average pay higher other benefits

p Average pension contribution made by companies has also increased in 2015

p 65% of companies made a pension contribution of between 5-15%

p Managers benefit from higher contributions (10.1%)than non-managers (8.9%)

p Larger companies on average make higher contributions than smaller companies

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Q - Do you benefit from any form of long term incentive plan?

Increase in long term incentive plans

p Managers far more likely to benefit from long term incentive plans

p Higher paid and longer serving compliance professionals more likely to benefit from long term incentive plans

p Long term incentive plans more common in larger companies

Q - What is your holiday entitlement?

Q - Does your employer provide you with the opportunity to work flexibly to any significant level?

Quality of life

Average holiday entitlement up to 27 days

Increase in flexible working

p Average holiday entitlement has risen from 26 days in 2014 to 27 days in 2015

p The most common holiday entitlement is 25 days, enjoyed by 36% of compliance professionals

p 58% of compliance professionals benefit from between 24-27 days

p Only 8% of compliance professionals have less than 24 days, and only 5% more than 30 days

p Flexible working significantly up on 2014

p No real difference between men and women in 2015

p 66% of managers are more likely to benefit from flexible working than non-managers at 56%

p 65% of compliance professionals who have changed job benefit from flexible working against the 60% who have not

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Contractors in work

GENERAl fINDINGS

Q - Do you think the market for your skills is improving or deteriorating?

Q - How quickly were you able to secure your current contract?

Q - How long have you been in your existing contract?

Significant increase in optimism

Contracts being secured more quickly

No change in length of existing contract

p Slight drop in optimism versus 2014

p Increase in number who think the market is deteriorating

p 80% started their current contract within 1 month, versus 67% in 2014

p Only 10% taking over 3 months to find a contract

p Time in existing contract virtually identical to 2014

p 52% of contracts still over 6 months

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CONTRACTS

Q - When considering a new contract, what is the most important consideration?

Q - Which best describes how your current rate compares with your previous rate?

Q - What is the anticipated length of your current contract?

RATES Of pAY

Quality of work increasingly important

Rates of pay down slightly

Contract lengths decreasing

p Type of work becoming key

p Rate of pay still important

p 56% report an increase in their current rate

p This is slightly down on 2014 when 59% reported an increase

p Increase in contracts anticipated to last less than 6 months

p Similar number of contracts expected to last over 9 months

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Q - Are you satisfied with your current contract?

Q - Do you believe you are adequately compensated?

p Satisfaction with current contract significantly up on 2014 and not far off 100%

p Increased satisfaction with compensation versus 2014

lEVElS Of SATISfACTION

Increased levels of satisfaction

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Contractors looking for work

GENERAl fINDINGS

Outlook fairly balancedQ - Do you think the market for your skills is improving or deteriorating?

Market getting tougher for those looking for contracts?

Q - How long have you been seeking a contract?

Q - Are you finding securing a contract more or less difficult than anticipated?

p More contractors optimistic than pessimistic

p Half report the market is about the same

p Fewer contracts being secured within a month

p However, no one out of work has been looking for over 6 months

p Increase in the percentage of out-of-work contractors finding it more difficult to secure a contract

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4 Salary Guide

SAlARY GUIDANCE

Barclay Simpson analyses the salary data that accumulates from the placements we make in the uK. This provides a guide to salaries for compliance professionals.

The salary ranges quoted are for good rather than exceptional individuals and take no account of other benefits in addition to salary, such as bonuses, profit sharing arrangements and pension benefits.

WHOlESAlE BANKING & CApITAl mARKETS RANGE AVERAGE

Compliance or Financial Crime Assistant £40 – 55,000 £50,000

Compliance or Financial Crime AvP £50 – 75,000 £60,000

Compliance or Financial Crime vP £75 – 130,000 £90,000

Compliance or Financial Crime Director £100 – 170,000 £130,000

Head of Compliance or MLRO £140 – 250,000 £190,000

Global Head of Compliance / Financial Crime £190 – 300,000 £250,000

ASSET mANAGEmENT, HEDGE fUNDS OR pRIVATE EQUITY RANGE AVERAGE

Compliance or Financial Crime Assistant £30 – 50,000 £40,000

Compliance or Financial Crime AvP £50 – 70,000 £60,000

Compliance or Financial Crime vP £65 – 95,000 £80,000

Compliance or Financial Crime Director £95 – 140,000 £120,000

Head of Compliance or MLRO £110 - 160,000 £130,000

Global Head of Compliance / Financial Crime £120 - 250,000 £180,000

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WEAlTH mANAGERS OR pRIVATE BANKS RANGE AVERAGE

Compliance or Financial Crime Assistant £30 - 45,000 £40,000

Compliance or Financial Crime AvP £45 - 65,000 £60,000

Compliance or Financial Crime vP £60 - 90,000 £75,000

Compliance or Financial Crime Director £90 - 140,000 £120,000

Head of Compliance or MLRO £100 - 140,000 £130,000

Global Head of Compliance / Financial Crime £120 - 240,000 £180,000

GENERAl INSURANCE RANGE AVERAGE

Compliance or Financial Crime Assistant £30 - 45,000 £40,000

Compliance or Financial Crime AvP £45 - 55,000 £50,000

Compliance or Financial Crime vP £50 - 75,000 £60,000

Compliance or Financial Crime Director £75 - 110,000 £90,000

Head of Compliance or MLRO £100 - 200,000 £140,000

Global Head of Compliance / Financial Crime £120 - 200,000 £150,000

RETAIl BANKING, lIfE & pENSIONS AND mORTGAGES - REGIONAl RANGE AVERAGE

Compliance or Financial Crime Assistant £30 - 40,000 £35,000

Compliance or Financial Crime AvP £40 - 60,000 £48,000

Compliance or Financial Crime vP £60 - 80 ,000 £70,000

Compliance or Financial Crime Director £80 - 120,000 £100,000

Head of Compliance or MLRO £110 - 140,000 £120,000

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ABOuT BARCLAY SIMPSON06Barclay SimpsonBridewell Gate, 9 Bridewell PlaceLondon EC4V 6AWTel: 44 (0)20 7936 2601Email: bs@barclaysimpson.com

If you would like to discuss any aspect of the reports please contact the following divisional heads:

Corporate Governance Adrian Simpson as@barclaysimpson.comInternal & IT Audit Daniel Flynn df@barclaysimpson.comRisk Matt Brown mb@barclaysimpson.comCompliance Tom Boulderstone tgb@barclaysimpson.comSecurity Mark Ampleford ma@barclaysimpson.comLegal Jane Fry jf@barclaysimpson.com

To discuss our international services please contact:Europe Tim Sandwell ts@barclaysimpson.comMiddle East Chris L’Amie cla@barclaysimpson.comAsia Pacific Russell Bunker rb@barclaysimpson.comNorth America Daniel Close dc@barclaysimpson.com

Barclay Simpson is an international corporate governance recruitment consultancy specialising in internal audit, risk, compliance, security, business continuity, legal and treasury appointments. Established in 1989, Barclay Simpson works with clients in all sectors throughout the UK, Europe, middle East, North America and Asia-Pacific from our offices in London, New York, Dubai, Hong Kong and Singapore.

We add value by using our unique focus on corporate governance, our highly experienced specialist consultants and access to both the local and international pools of corporate governance talent. Our strength lies in our ability to understand client and candidate needs and then to use this insight to ensure our candidates are introduced to positions they want and our clients to the candidates they wish to recruit.

for more in-depth coverage, comprehensive reports and compensation guides exist for the Internal Audit, Risk, Compliance, Security and legal recruitment markets. These can be accessed from the links below.

We also produce other specialist reports, each of which can be accessed for free on our website: www.barclaysimpson.com

www.barclaysimpson.com/mid2015markettrends/auditwww.barclaysimpson.com/mid2015markettrends/riskwww.barclaysimpson.com/mid2015markettrends/compliancewww.barclaysimpson.com/mid2015markettrends/securitywww.barclaysimpson.com/mid2015markettrends/legal

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