Finding the right compliance professionals for early stage fintechs

Thanks David. I think Consumer Duty is still a big area for fintechs to address. It affects all retail financial services firms. Organisations need to demonstrate to the regulator that they’re continuing to build robust controls and are monitoring outcomes effectively.

Financial promotions are also under the spotlight at the moment with the FCA requiring increased accountability from firms to ensure that the target audience is given transparent information that isn’t misleading.

Meanwhile, the FCA issued a “Dear CEO” letter in March. The FCA wants to ensure that firms can evidence and document controls around financial crime, as well as show a clear audit trail on decision-making. Discrepancies between what firms are registered to carry out and their actual activities have caused concern. The regulator is therefore looking to see that financial crime controls keep pace with business growth and that adequate training is in place.

There are also sector-specific challenges on the horizon, such as the recent developments with car finance mis-selling and discretionary commission arrangements, which could see many firms owing significant redress to customers.

Well, there’s no blueprint with a start-up, so the initial challenge is understanding exactly what they need, articulating those needs, and then finding a compliance professional who can fulfil the requirements.

Senior management may also be outside their comfort zone. For example, while they likely have expertise in product development, transactions and delivery channels, they may not have been directly involved with working with the regulator.

First, they should know what the regulator requires. That means understanding exactly what your specific product offering needs are to get regulatory approval and what you’ll need to do to satisfy the regulator as the business grows.

More specifically, identify exactly what you need from your compliance hire:

• What do they need to deliver on initially, as well as on an ongoing basis?
• What problems are likely to arise in the future and can this person help to solve those problems?
• Are senior management and your compliance hire aligned to produce the same outcome?

Implementing a robust interview process is also important. Fintechs must ensure the delivery they are expecting aligns with the capabilities of the professional they hire. It’s not uncommon for firms to hire what they think they need, but then be disappointed with the results.

These problems can sometimes be exacerbated by a hiring process that’s too informal. A match on personality – often over a friendly chat – may help you find a good cultural fit, which is obviously important. But, ultimately, you need to satisfy the regulator, so any hiring process must involve a deep dive into competencies.

Great question. You can only hire the right person if you know where to look. If you can’t find the right person in your immediate network, you should consider outside help.

Find a specialist agency that understands your business and objectives. They will have access to a community of experts, which they can draw upon for regulatory insights and advice. These resources will enable them to anticipate what is coming down the line and help predict future regulatory change.

Also, the best person for the role may not be actively seeking a move, so you may need to use an agency who can take your offering to them. A trusted partner with a deep understanding of the market can offer recommendations, recognise your unique needs and formulate a job spec that will attract the right candidates. They can also help with interview deep dives, as well as get referrals and references.

It comes down to taking advice from people who have recruited in this sector before, so you get it right the first time and avoid hiring the wrong people. Listen to people who are experts in this area and have extensive knowledge and experience of the compliance pitfalls that early stage fintechs often encounter.

Fintechs are fast-paced and dynamic, so founders are often looking for people who are adept at keeping multiple plates spinning. They need someone who is solutions-driven, who understands the entrepreneurial mindset and who can balance the aims of the business within the regulatory framework.

A good place to start is to visualise your business growth, and ask yourself whether the compliance hire you have in mind is going to be the right person to deliver over the short, medium and long term.

Can your compliance hire communicate your vision to other stakeholders? Do people in both the business and the regulator have trust in your compliance hire? And will your candidate help shape your business plan?

The right compliance hire is integral to your vision, so fintechs will want a person who really believes in what the business is trying to do and can help to ensure it succeeds.

Candidates who want to work in fintechs are often excited to be a part of something new and vibrant. They get the chance to be more entrepreneurial and receive individual recognition and reward for sharing ideas that can move the company forward.

Employees are also juggling new tasks every day and having to think outside the box to overcome the different challenges they face. In other words, there’s never a dull moment at an early stage fintech.

It’s therefore important to clearly articulate and promote your fintech’s vision if you want to attract and retain the best people ahead of your competition. Furthermore, you need to keep communicating your vision over time as it evolves.

Ultimately, you must support employees and make them feel valued – they are creating your vision, and they need to feel you are on a journey together.