Compliance

Compliance: A policeman’s lot is not a happy one

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Hector Sants' break from his role as chief compliance officer at Barclays due to "exhaustion and stress" has highlighted the increasing strains on banks' internal policemen.

Compliance, the part of the bank which polices its activities for illegal or suspicious trades, has traditionally been one of the more sedate areas of the financial world, lacking the long hours, snap decisions and potentially huge rewards of the trading floors.

Yet in the past couple of years, many of those working in compliance are now working longer hours and facing more demands than colleagues in the front office, industry professionals say.

"The complexity of processes has really been ramped up," Sally Bernstein, co-leader of ethics and compliance services at PwC, told CNBC.

"Now everybody is highly regulated, there are a lot of demands."

(Read more: Barclays exec takes leave for stress)

And the importance of compliance can be seen both in the increased power granted to compliance officers – and the corresponding rise in their salaries. The number of U.S. compliance heads who report directly to their chief executive rose from 20 percent in 2012 to 28 percent this year, according to a recent study by consultants PricewaterhouseCoopers (PwC).

"While financial services firms have reduced headcount elsewhere, they are still hiring in compliance," Aaron Bolton, senior consultant at recruitment company Black Swan, told CNBC.

And the problem is not limited to financial services. The accusations of bribery directed at several pharmaceutical companies' Chinese operations, including Novartis, GSK and Eli Lilly, shows how other industries are affected by failure to enforce the same standards across their global operations.

(Read more: )

Sants' move had raised eyebrows because he had been no stranger to stress earlier in his career. The appointment of such a heavy-hitter, with a seat on the board (which not many compliance officers have), was seen as a clear signal from Barclays that it was serious about cracking down on dangerous activity after being found to have played a major role in rigging a key overnight banking rate known as Libor. The scandal costs a raft of top executives at the bank – including chief executive Bob Diamond -- their jobs.

New Financial Regulations Hard to Manage?
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New Financial Regulations Hard to Manage?

Sants, an ex-investment banker, had previously run the U.K.'s Financial Services Authority, its financial regulator, at the height of the financial crisis. He took over at the regulator just three months before the run on Northern Rock in 2007, which marked the start of a period of frenetic activity in the U.K. financial services industry, and stepped down last year.

Earlier in his career, one of his first tasks when he joined Credit Suisse First Boston in his career, one of his first tasks was to negotiate a £4 million ($6.43 million) fine over misleading the Japanese tax and regulatory authorities – at the time, the biggest fine the FSA had ever leveled.

Yet after less than a year at Barclays – a year which included charges for traders implicated in the Libor scandal and a surprise capital-raising – Sants has taken a three-month break to recover from stress and exhaustion. Lloyds chief executive Antonio Horta Osorio took a similar break on the grounds of stress in 2011.

Compliance has become a more difficult place to work because authorities around the developed world have upped the ante with new regulation and stricter enforcement of existing regulations like the U.S.'s Foreign Corrupt Practices Act (FCPA). The risks compliance officers are most worried about are data privacy, bribery/corruption and industry specific risks like the Libor scandal, according to PwC.

(Read more: How to trade increased regulation)

"There is a lack of sympathy and tolerance for financial services, particularly at the political level," according to David Symes, managing director at Compliance Recruitment Solutions.

"The regulators are coming in for more inspections and reacting more quickly."

And, to make sure they are covering all their bases, bank employees are involving compliance departments in more and more parts of their work – drastically increasing the workload for the supervisors.

"Until 2008, compliance was treated as a necessary evil, to be contacted only because you had to. Now, to cover themselves, everyone will copy in compliance in an email even if it's not really relevant," Symes said.

(Read more: How much does compliance cost? Nobody knows)

There are also still not enough well-qualified and experienced people at the top of the compliance world, according to Symes, so those who are well-qualified, like Sants, can charge a premium for their services. Sants was on a base salary of close to £700,000, with the potential for further earnings from bonuses and long-term incentive plans.

"There's no substitute for experience. They have to be able to juggle managing the risks with the minimum of disruption to business," Symes said.

- By CNBC's Catherine Boyle. Twitter: @cboylecnbc