The financial services landscape
is constantly evolving, with organisations having to implement increasingly stringent measures to keep risks under control and maintain compliance with ongoing regulations.
As such, the business assurance
function in any firm remains an ever-important part of the financial services industry. At Huntswood, we’re seeing the focus on this function increase as the FCA continues to develop new regulations and measures to protect customers and markets.
This year, firms will need to be aware of several regulatory and industry factors that could impact their business assurance function:
A shift away from permanent roles throughout the country
Many of the roles we source for are in the South West and along the M4 corridor. This area – along with much of the UK – has seen a dramatic swing from non-contract roles to a contractor-dense market. This is due to the upsurge in the number of large contract-based projects seen within the industry, including a large pension and investment review project in Bristol which ran for several years – a project in which every level four qualified contractor along the M4 corridor seemed to have worked on at some point.
The result of the Retail Distribution Review (RDR) in 2012, which saw many financial advisors turn to contracting, meant that the majority of those on this contract were ex-advisers. This move from permanent to contract was undertaken in volume across business assurance and the broader financial services market, with many financial advisors identifying an opportunity for them to move into paraplanning, file review and quality assurance roles.
How the RDR and FCA led to more qualifications on the market
Before 2013, many firms were happy to take on less-qualified professionals to do QA and training and competence work. Then came RDR, a move from the FCA designed to improve professional standards and increase transparency in advice.
The RDR’s impact has been felt widely throughout the financial services industry, with advisors banned from taking commission and an enhanced focus, in general, on the qualifications required to provide pension and investment advice.
This resulted in a number of smaller financial advice firms deciding to close and some advisors opting to retire instead of taking further exams and qualifications late in their careers. For many, however, it was an opportunity to move from the heavily restricted financial advice market to lucrative contract roles within business assurance.
In 2018, however, there was another shift as the FCA announced new rules governing pension transfer advice. Now, the qualifications required of contractors working with pensions – G60, AF3 and AF7 – act as a ‘stamp of approval’ that shows they are fit to provide pension transfer advice. For those working with pensions – particularly contractors – this has led to a scramble to undertake these crucial exams, with day rates and salaries increasing for those who are qualified.
IR35 could signal another market shift
Currently, almost two-thirds of the business assurance market is made up of contract workers. While many firms have recently been looking to add to their permanent headcount and reduce their overall staffing costs, the resources within business assurance haven’t historically been there, a factor which has led to a booming contractor market. In turn, this has seen salaries pushed up in order to lure contractors into permanent roles.
The new IR35 government legislation, when it comes into effect in April 2020, is expected to trigger a rebalance in the workforce. The legislation will potentially lead to increased tax payments for many contractors within business assurance and the wider private sector, which may diminish the overall appeal of contracting for many.
As contractors look to the permanent market in order to secure an attractive salary, we are likely to see an influx of permanent business assurance professionals vying for roles – and potentially pushing salaries back down as the current candidate-led market shifts towards a client-led status.
To stay or go? Contract vs permanent for business assurance professionals
As IR35 won’t come into effect until April 2020, contractors can still enjoy a year of working within the current tax restrictions – and, therefore, potentially earning more.
Alternatively, contractors considering a move to the permanent space could consider finding a role now in order to have security in the years ahead. The contractor space will remain appealing for many, with its flexibility, rates and opportunities to work with different firms, technologies and people, but those who were drawn to business assurance contracting purely for its tax implications may now opt to go permanent.
Let Huntswood help you
Our business assurance team are specialists in this space, recruiting purely for paraplanning, quality assurance, file review and training and competency roles across both the contract and permanent space. While your accountant can advise you on whether contracting or permanent may be the best financial move for you, we can help you to identify and secure the perfect role for your situation.