The FD Future Agenda: Compliance and careers

The current rash of new regulation being introduced in the wake of the banking crisis is far from over. Regulators are taking the bull by the horns and re-examining the rules of the system. Anything that is deemed to have encouraged the reckless practices is being rooted out and removed apparently.

Rooting and removal seeming to take precedence over commonsense in a guilt-fuelled attempt to make right what shouldn't have gone wrong.

Many pundits will applaud, but the Finance Director is the one who will pick up the pieces [1]. The finance function will be front and centre in the effort to understand and comply with new regulations, meaning that the FD will be reliant on institutes and accounting firms quickly getting up to speed with the new rules.

FDs are now making a concerted effort to ensure they have sufficient expertise in their organisations. But for many it may be too late, and so advisory fees are bound to rise as FDs look to the professional firms to run compliance.

The regulations that will cause the most headaches include IFRS,the Banking Code and International Accounting Standards, plus a whole raft of initiatives driven by the G20 and IMF. These are only the tip of a regulatory iceberg with politicians making increasingly populist suggestions like George Osborne's ludicrous hypocrisy about capping bonuses at £2,000 cash.

It's actually more harmful to the bankers and non-banking employees who didn't see themselves or behave like deluded masters of the universe.

The institutes and professional firms are two key constituencies in this debate. FDs have long lamented the poor quality of some of the graduates coming through to work in accountancy, so what is being done to produce all rounders: accountants with a firm grasp of the regulatory environment alongside an understanding of the commercial imperatives that drive the business forward.

As finance directors develop their careers., the chances are the ey may well wish to look to add other roles to their portfolio. Non-executive work can be an educational- and lucrative experience for the FD. The benefits of non-executive work are numerous and include access to alternative thinking; networking and a new, different understanding of different business models.

However, the demands of the compliance burden can’t be ignored. The Higgs Combined Code laid out a series of rules and guidelines into the scope of non-execs’ responsibilities. And in the ongoing aftermath of the banking crisis, which saw boards stuffed with over-paid non-executive directors across the UK taking disastrous decisions, where does that leave the finance director seeking to broaden their experience?

For many finance directors, the role that will most suit their skillset is that of chairman. Chairing a board requires the classic FD skills: consensus building, asking intelligent and challenging questions as well as being the voice of reason and restraint in the areas of risk and cost.

Few FDs have taken that route to date, most preferring to gun for a chief exec’s role but that may change radically, particularly as the disgraced non-execs with no real knowledge of the markets and the compliance agenda are finding themselves no longer in demand.

There are new options [2]for FDs looking to the next stage on their personal and career development.