Following the financial crisis, the profile of the compliance department has been catapulted to the top of the agenda for the boards of most banks, financial services firms and other businesses. 

As a result, the role and importance of the compliance officer has never been more relevant. More and more regulation, the imposition of multi-billion dollar penalties and personal liability has led boards of directors to change the way they operate and think. At the core of this new thinking, is the drive to change or reinforce a culture which accords with regulatory expectations.

It has been reported that, in the last five years, some 61 percent of the profits of the major British banks has been spent on penalties, restitution and investigations. It is clearly a failed business plan which generates or tolerates such losses. The responsibility for such failure must be shared between a number of parties including the board, the sales department and compliance. 

In the past, many firms seem to have had a culture which marginalised the importance, and therefore the impact, of compliance. Perhaps the best example of this was the HBOS case, in which the head of group regulatory risk, Paul Moore, blew the whistle to the board about the risks and the chief executive, James Crosby, dismissed him. Compliance tried, but the board did not listen. 

Behold, in 2015 the compliance function is critical to a firm's success as well as the welfare and wellbeing of the board. A recent survey by a major recruitment firm established that cash remains the main driver (90 percent) for employees of regulated firms, so just how does this reconcile with culture? This potential conflict has been acknowledged by governments, regulators and firms themselves. Most recently it was reported that a bank subject to a U.S. court monitoring order had reduced bonus payments for senior managers who had manipulated the findings of an anti-money laundering (AML) audit report and also improperly influenced the auditors themselves. 

Yes, we live in changing times. For compliance officers, they are potentially exciting times, but perhaps this is not the case for frontline banking colleagues. 

Tomorrow's bankers

All businesses need to grow and evolve a business; a business that does not grow is a business that is dying. Consequently, all businesses, including banks, financial services firms, energy companies, IT companies, law firms and consultants are competing to hire the best young minds. In the war for talent and businesses, industries are fighting each other to secure tomorrow's future with today's talent. Whereas banking and financial services used to be attractive businesses for the most talented young employees, things have changed.

Creating the future

Studies have established that young, talented people want to work in creative environments, where the reward is more than cash, important as it is. Innovative companies which provide freedom to be creative are much sought-after. The problem for the financial services industry is that creativity is being restricted by new regulations, personal accountability, regulatory expectation, compliance and anxiety. In some instances the anxiety has manifested itself as fear; a fear of getting it wrong. Thus, today's talented young employees are increasingly shunning banking and finance in favour of other industries, where creativity is encouraged and embraced. 

Young people want to be excited about their future and excitement at work, including, learning, development and innovation, are important motivators. In fact, analysis has shown that inspired employees are five times more likely to be creative, whereas anxious employees are three times more likely to be non-compliant. Essentially, anxious employees are more inclined to cut corners and break the rules. Many determine it is the only way they can achieve success, but we have seen that such success is short-term and often leads to disastrous long-term outcomes, perhaps the best example of which is the "stripping" of U.S. dollar wire transfers. (This was the practice whereby major non-U.S. banks removed sanctions data from U.S. dollar-denominated wire transfers to circumvent U.S. sanctions laws.) 

As the song says, money can't buy you love', and this applies to employers as well as life partners. Other employers can offer more money, but they may also be able to offer excitement, opportunity, invention and an environment where creativity, even risk-taking within the rules, is encouraged.

Today's compliance

In fact, as a discipline, compliance is now a $10 billion/annum business. The profile, relevance and importance of the compliance officer have never been higher. Moreover, the discipline has spread to a wide range of other industries including energy, media, IT and health care. The war for talent is being fought on many frontiers, including compliance. There is a shortfall of talent and the demands of employers are increasing. Now is the time, the opportunity for the innovative, creative compliance officer. 

At a recent Thomson Reuters conference one of the speakers suggested that compliance officers should substitute the word "vulnerability" for the word "risk", as this would produce better outcomes. Not everyone was persuaded, and indeed one person suggested that risk departments were unlikely to be keen to be rebranded as "vulnerable persons' departments". Nonetheless, the discussion highlighted the opportunities for innovation and creation, and for delivering improved outcomes. 

Such innovation and creation must be embraced and replicated by regulators, who should seize the moment to drive improved collaboration and cooperation within an industry that has seen compliance costs reach hitherto unimagined levels. Of course, there needs to be universal acknowledgement that historically mistakes were made, and in particular that compliance was often diluted or totally disregarded. 

One significant benefit of the financial crisis has been the migration of experienced front office employees into the now-lucrative world of compliance. Some of these former traders and sales people have applied their knowledge of systems, controls (or lack of) and culture to the development of enhanced compliance programmes, improved monitoring processes and a compliance culture.

It is not all about the cash

This year, as in previous years, the heads of some major businesses have agreed to forego a bonus award because of issues that have arisen under their watch. Such issues have included mis-selling, operational failure, poor customer service and regulatory failure. These noble gestures are to be welcomed and encouraged, as in the longer-term they engender trust, and without trust, businesses will have no customers. 

Thus, the champions of industry and the chief executives of 2015 are in the market place for compliance officers who can help them to retain profits, regain trust and provide innovative risk compliance risk management, which is effective, but efficient. Most importantly, the chief executives of 2015, wants a compliance officer he/she can rely upon. The CEOs want to sleep at night sound in the knowledge the compliance function is working, the culture is the right one and the business has a future.

Cash is critical, but culture more so

It is not all about the cash, as demonstrated by the gestures made by these business leaders, but cash is nevertheless critical, because nowadays, every chief executive wants a good compliance officer and there are not enough to go round. The chief executive rules, cash is king, but there is more to it than cash. Other firms with bigger problems will offer more cash, but if they cannot replicate a culture which accords with the compliance officer's values, cash alone will not suffice.