The challenges of managing FinTech compliance

Sadly for most this blog is not a shock revelation about George Clooney – the lead in the blockbuster movie The Perfect Storm (released in the year 2000) – giving up his acting career to take up a role as a Compliance Manager – rather it is a look at the challenges faced by the growing number of FinTechs in the UK who are desperately struggling to recruit and retain effective compliance managers in order to meet the regulatory requirements of the FCA.

The Perfect Storm for George was the arrival of three massive storm systems arriving at the same spot simultaneously creating massive winds and waves that, when combined with some over optimistic decision making, led to a tragedy at sea.

The perfect storm for FinTechs as they seek to recruit and retain effective compliance managers is the result of three equally massive challenges that can cause real threats to a FinTech’s sustainability. Let us explain the three challenges:

Firstly FinTechs are looking for compliance managers who have broad compliance experience and can advise on the compliance requirements of all areas of the FinTech business (sales & marketing, risk, operations, IT, etc). This breadth of experience is usually only found in very senior compliance managers who have developed their experience over 15+ years. As a result they are not cheap and are also difficult to find. Many FinTechs find the people they want to pay a £30-£40K salary, are in the market for more like £120K+.

Secondly FinTechs are looking for employees who really “get” their business and are able to fit in with the “go getting”, entrepreneurial cultures they prize – including recreation, table football and a fluid, creative working atmosphere focusing on growth and opportunity. But while there are many dynamic compliance managers out there, there simply aren’t enough of them able or willing to make the transition into a FinTech culture which compliance as a discipline does not functionally groom people for.

Thirdly, where FinTechs find people who they see as good compliance candidates because of, for example, their Tech knowledge and their cultural fit, they face a challenge in growing their compliance knowledge and capabilities beyond sending people out to courses which are not designed for their needs in fast moving businesses.

This can leave FinTechs to either pursue a “long shot” policy of trying to track down a suitable candidate in a very limited pool or hiring someone with limited or no experience in the hope they can learn the role on the hoof without any extra development or support. Either path can lead to gaps in the FinTech’s ability to meet regulatory requirements and we observe often leads to expensive churning of people as firms repeatedly find they don’t have the people they need and go looking for replacements.

Enough of the doom and gloom. For those that are interested, we at TCF believe we have developed a set of alternative options that will enable ambitious FinTechs to plug their compliance manager gaps.   Using our experienced network and leveraging our wide experience, we have developed a range of options for our clients. These include providing a comprehensive development programme for compliance managers in FinTechs to boost experience and performance, either as a standalone or in combination with a tailored managed support service backed up by the choice of experienced full or part-time interim compliance managers.

If you would like details of any of these options then please do get in touch.