UBS scandal highlights control risks

ANOTHER DAY, another dollar. Or, in the case of Swiss bank UBS, rather a lot of dollars.

As we devour the headlines about the latest “rogue trader”, should we anticipate increased regulation and tighter controls by the finance industry’s regulatory authorities?

I, for one, hope not. The last thing we need right now is a knee-jerk reaction because politicians need to be seen to be doing something and the banks seem to be everyone’s favourite whipping boy.

The imposition of additional internal controls and yet more levels of red tape would  make life even more difficult for finance directors, and it could also slow down the growth that organisations need to survive in this difficult economic climate.

Speed to market is critical to business success, and CEOs and CFOs have a constant battle to increase sales and generate business growth. FDs already tread a very delicate line between ensuring corporate governance controls are robust and making sure they don’t suffocate the business.

Having said that, we cannot ignore the importance of compliance – nor should we. This will be a wake-up call to many organisations that, in recent years, have scaled back their focus on compliance and internal auditing in return for a greater focus on sales.

We may well see internal auditors who have been quietly beavering away for the last 20 years suddenly put under the spotlight. If they are found wanting, they could be moved on in favour of a stronger, more proactive team.

We’re not yet at the stage where we can draw comparisons with the impact of the Sarbanes-Oxley Act in the US, when auditors and technical accountants saw their salaries shoot up dramatically in the wake of greater compliance regulations in the post-Enron era.

This latest banking episode is, relatively speaking, a much smaller drop in the corporate ocean, but it is still important. For example, there’s no doubt that a good compliance expert searching for a job in the banking sector could probably command an extra 25 per cent this week.

And FDs who have a solid compliance and auditing background will be more valuable than ever, not least to companies that want to be seen to be strengthening their internal controls to reassure shareholders, regulators and the public.

In recruitment terms, the UBS scandal puts compliance back on the agenda, even though the impact of it may be relatively isolated. This means it could change the way we do business in the future. And that could signal interesting times ahead in the job market.

Mark Craddock specialises in executive recruitment for the finance sector at Eton Bridge Partners