Free cookie consent management tool by TermsFeed Blog - Financial Regulation – Why employee retention is key to good practice | William Rose

Financial Regulation – Why employee retention is key to good practice

Financial regulation underpins almost every aspect of the financial services sector. These laws and regulations determine how asset managers, finance brokers, bankers, and many more, must operate and conduct themselves. 

Without proper financial regulation, unscrupulous firms can bring the sector into serious disrepute. We’ve seen this recently, with major scandals involving Greensill Capital and London Capital & Finance showing just how important financial regulation is.

Although not widely acknowledged, solid, robust employee retention plays a key role in financial regulation. Here’s why and what you can do to implement it. 

Why retention is key

The current financial landscape is wracked with uncertainty. 

Covid-19 is still a very real issue, with the global economy yet to recover fully. While there is some cause for optimism (KPMG predicts global GDP will rise by 6.6% in 2021), there is a long way to go until the virus is fully under control.

As a result, the last thing financial institutions need now are the hefty costs that come with poor retention. Indeed, Forbes estimates that the cost of turning over a mid-level employee is 125% of their salary. For senior executives, that figure rockets to an eye watering 200%. 

Up next, there’s Brexit. Almost forgotten in the wake of the pandemic, Britain’s decision to leave the EU is finally beginning to hit home. Recently, The Financial Times reported that the UK’s swaps market is taking a hit, as more traders move their business out of London. 

Keeping your star performers is therefore essential. In the current climate, replacing them will not only be costly, but it may also not be possible. 

But there’s another reason to retain staff where financial regulation is concerned: performance. High turnover of staff often means low productivity. Financial regulation is one area that organisations, such as banks, hedge funds and asset management firms, cannot afford to slack off.

With that in mind, we’ve rounded up 4 key areas for you to consider regarding employee retention and financial regulation: 

1. Offer constant regulatory training

Financial regulations change often. Recent updates to the UK’s operational resilience policy, driven by Bank of England (BoE)Prudential Regulation Authority (PRA), and Financial Conduct Authority (FCA), is just one example of this.

As the laws that govern us change, it’s vital that financial institutions upskill and train their employees to meet these challenges. Therefore, a robust and thorough training program is essential. 

Not only will this ensure regulatory compliance, but it offers growth opportunities for employees – a key factor in retention. 

2. Embed financial regulation within the company culture

Studies show that a strong company culture is key to retaining staff. In fact, 48% of employees said that a poor culture would be enough to start them looking for a new job, according to Columbia University.

So how does this tie into financial regulation? The recent paper, Regulation, Corporate Culture and Individual Responsibility in Banking, argues that an institution’s culture is pivotal in reducing instances of misconduct.

Ethics and honesty must be sown into an organisation, it argues.

“Regulation of banks is a necessary though not sufficient condition for good behaviour. There needs to be a greater focus on the underlying culture of banks because if this is hazardous no amount of regulation will prevent misconduct,” says the report.

3. Invest in tech

Like most sectors, finance is undergoing a period of rapid digitalisation. 

As a result, financial regulation as we know it is set to change. Major regulators, such as the Financial Conduct Authority (FCA) and the Bank of England, are already embracing this shift.

To keep pace and retain staff, financial service organisations must invest in tech to compete. Take investment banking, for example. With growing competition from the fintech space and increasing transparency over prices, digitization is a major priority for 2021 and beyond.

4. High turnover creates knowledge gaps

We know that high staff turnover is costly and damaging for morale. What most employers don’t consider is the vast knowledge gaps it can create. In a heavily regulated industry such as finance, the outcome can be catastrophic.

KPMG’s Evolving Asset Management Regulation Report points out that asset management is seeing a regulatory shift towards cyber security, data protection, cloud outsourcing, distributed ledger technology (DLT) in payment, and clearing and settlement systems – to name but a few growing areas of concern.

It’s clear that for all sectors, cyber security professionals are already in short supply. And that’s just one example from the above list. Therefore, retaining experts who operate in these areas is vital for financial institutions, such as asset management. 

When you’re building highly skilled compliance teams, recruitment is a key concern. William Rose Associates is a specialist recruitment agency working with organisations in the financial services sector.  

Let us find you the right people to keep your business compliant.

If you’re interested in learning more about what we can do for you, please get in touch.

Subscribe newsletter
Back to resource Hub

Take a look at some of our Latest Roles

Explore a curated selection of opportunities, where your next career move is waiting.