Part-Time Compliance: What the Finance Team Ends Up Absorbing

Plenty of smaller FCA-regulated firms run their compliance arrangements on a part-time basis. The Compliance Officer is in two days a month, the MLRO is a retained appointment, or one person covers both on a fractional footing. Done properly it is a sensible, proportionate structure, and it is increasingly the norm below a certain size.

What rarely gets discussed when the arrangement is set up is where the rest of the work goes. Because a part-time compliance function does not mean a part-time volume of compliance activity. It means the judgement calls are made by the appointed holder and a good deal of the surrounding work lands somewhere else in the business. In most regulated firms, somewhere else is the finance team.

This is not a complaint about fractional arrangements, which we think work well. It is an argument for naming the work in advance, because a finance function that absorbs it unplanned ends up doing it badly, late, or at the expense of something with a statutory deadline.

Why the Work Lands on Finance

Three reasons, and they are structural rather than accidental.

Finance holds the data. Transaction records, client money balances, fee and commission flows, counterparty details, the general ledger. Almost any compliance exercise that needs evidence needs an extract from a system the finance team owns.

Finance is there every day. A part-time compliance officer is not, and the queries that arrive between visits — from the bank, from a client, from the regulator’s portal — need somebody present to acknowledge them and gather what is needed.

And finance already works to external deadlines, so it is the function that is assumed to be good at producing things on time. That assumption is correct, which is precisely why the work keeps arriving.

What Actually Lands: The Honest List

Firms are usually surprised by the length of this when it is written down. In a typical small regulated firm with part-time compliance cover, the finance team is routinely asked for the following.

Data extracts for the monitoring programme. Sample populations, transaction listings, client lists filtered by product or category. Often ad hoc, often needed quickly, and almost never a straight export from one report.

Regulatory reporting inputs and sanity checks. The returns themselves may be finance’s job anyway, but the compliance view on classification and treatment usually produces a round of questions back.

Client money and asset reconciliation evidence. Where the firm holds either, the reconciliation work is finance’s and the assurance over it is compliance’s, so the same records get prepared twice for two different audiences.

Capital adequacy inputs. The calculation sits with finance; the regulatory interpretation sits with compliance; the two have to meet, usually in a hurry, around reporting dates.

Financial crime support. Not the suspicion decisions, which belong to the MLRO, but the surrounding work: payment histories, counterparty detail, source of funds evidence, chasing documentation from clients who have gone quiet.

Onboarding bottlenecks. Where due diligence stalls, it frequently stalls on something commercial or financial, and finance ends up as the broker between the client and the compliance requirement.

Audit, skilled person and supervisory requests. Any external request for evidence turns into a finance exercise within a day, whoever it was addressed to.

None of these are inappropriate. Several are properly finance’s work. The point is that collectively they amount to real capacity, and in most firms nobody has ever added them up.

The Cost of Leaving It Undefined

Three things go wrong when the division of labour is implicit.

The first is timing. Compliance requests arrive without regard to the finance calendar, which means they tend to land in the week finance has least room. The work then gets done hurriedly or deferred, and deferral is how a monitoring programme ends the year partly executed.

The second is the quality of the evidence. A finance team producing a sample population for a monitoring test without being told what the test is will produce something reasonable and possibly not what was needed. Rework is common and it is invisible until somebody reviews the file.

The third, and the one that matters most, is that nobody owns the gap. The compliance holder assumes finance is handling it because finance usually does. Finance assumes compliance has it in hand because compliance is the function responsible. Both assumptions are reasonable in isolation and together they produce work that simply does not happen. Our piece on where accountants and finance teams fit into compliance monitoring covers the same boundary from the other side.

Drawing the Line, Specifically

The fix is not complicated, and it is worth doing at the point the part-time arrangement is set up rather than a year in.

Start with the monitoring programme for the year and work backwards. For each test, write down what evidence it needs, who produces it, and by when. Most of it will be predictable, which turns ad hoc requests into a schedule the finance team can plan around. Reserve the ad hoc route for genuinely unplanned matters.

Then name the recurring obligations explicitly: who prepares the regulatory returns, who reviews them, who signs them off, and what happens if the two functions disagree on treatment. Disagreement on classification is normal and the escalation route should exist before it is needed.

Finally, agree what finance will not do. A part-time compliance appointment is not a reason for the financial controller to be making judgement calls on suitability, financial promotions or whether a matter is reportable. Those decisions belong to the approved holder, and a finance team quietly making them is the most serious version of this problem, because the firm’s control structure is not what its documentation says it is.

Signs the Arrangement Has Drifted

Four symptoms, any one of which is worth a conversation.

The finance team can describe the firm’s compliance issues better than the compliance holder can. Compliance requests consistently arrive as emergencies rather than as scheduled items. The monitoring file is thinner at year end than the plan implied. Or a member of the finance team has started answering regulatory questions directly because it is quicker than waiting for the compliance visit.

The last is the one to act on. It usually means the part-time arrangement is under-scoped for the firm the business has become, rather than that anybody is doing anything wrong.

When the Answer Is More Compliance Resource

Sometimes the honest conclusion is that the firm has outgrown the arrangement. Volumes have risen, a new product or permission has been added, or the client base has changed shape, and a function scoped for the firm of two years ago is being propped up by the finance team.

That is a resourcing decision rather than a process one, and the options are broader than they used to be. A fractional compliance officer arrangement can be increased in days or upgraded in scope. Where financial crime is the pressure point, a dedicated MLRO appointment alongside the existing compliance officer separates the two workloads. Where one person covers both functions, moving to a properly scoped dual SMF16/17 appointment is usually cheaper than the capacity it releases in the finance team.

If you are not sure which applies, the diagnostic is the list earlier in this piece. Add up what the finance team actually spends on compliance support in a month. If the answer is more than the compliance appointment itself, the arrangement is not saving what the firm thinks it is saving.

For Finance Professionals in Regulated Firms

One last point, aimed at the accountants rather than the firms. Absorbing this work is not a career dead end — it is one of the more marketable things a finance professional in a regulated firm can do, provided it is documented. Experience of regulatory reporting, client money, capital adequacy and financial crime support is exactly what distinguishes a regulated-sector finance CV from a general one, and we have written separately about why finance in a regulated firm is a different job.

Keep a record of what you have actually owned. It is worth considerably more at interview than a line about working in a regulated environment.