A Money Laundering Reporting Officer (MLRO) resigns, a Head of Compliance goes on extended leave, or a regulatory review creates additional demands on an already stretched team.
For regulated firms, these situations can quickly create gaps in capacity, specialist expertise or senior oversight. Permanent recruitment may provide the longer-term solution, but it does not always address the immediate requirement.
Planning ahead allows firms to consider how additional support could help maintain continuity, rather than relying solely on existing resources while longer-term arrangements are established.
So, when should firms consider interim compliance support, and what should they look for when appointing additional resource?
Why should firms plan for interim compliance cover?
Senior compliance vacancies can create challenges beyond recruitment. Where a role involves a Senior Management Function (SMF), firms must consider the applicable FCA approval requirements, how responsibilities will be allocated during the transition and whether appropriate oversight can be maintained.
The FCA’s 12-week rule may permit temporary cover for certain SMF responsibilities in specified circumstances. However, firms should not assume it applies to every vacancy or interim appointment, and the relevant regulatory requirements should be assessed before arrangements are put in place.
Beyond regulatory approvals, firms also need to consider whether their existing compliance function has sufficient capacity and expertise to maintain effective oversight while managing additional responsibilities.
Planning ahead gives firms more options. It allows them to identify where additional support may be required, establish appropriate contingency arrangements and make informed decisions about the type and duration of resource needed.
When should firms consider interim compliance support?
The need for interim resource is not always driven by an unexpected vacancy. Firms may require additional capacity or specialist expertise at different stages of their development or in response to specific regulatory demands.
In our experience, five situations commonly create a need for additional compliance support.
- An unexpected departure or prolonged absence.
Where an MLRO or Head of Compliance leaves unexpectedly or is unavailable for an extended period, firms may need experienced support while permanent arrangements are established.Interim resource can help maintain continuity within the compliance function, subject to relevant regulatory approvals and clear allocation of responsibilities.
This allows firms to take a considered approach to permanent recruitment while ensuring that key compliance activities and oversight arrangements continue.
- A regulatory review or remediation programme.
Regulatory reviews, supervisory engagement and remediation programmes can create additional demands on a firm’s existing compliance function.Specialist advisory and assurance support can help firms assess regulatory expectations, evaluate existing arrangements and identify appropriate actions. Interim resource can complement this by providing additional capacity to support implementation and maintain business-as-usual compliance activity.
For example, a firm responding to findings from a skilled person review may require dedicated resource to coordinate remediation activity, strengthen controls, track progress and maintain reporting to senior management.
The objective is to ensure that regulatory priorities receive appropriate attention without compromising the effectiveness of ongoing compliance activities.
A business transition that changes the risk profile
Acquisitions, new product launches, market expansion and periods of rapid growth can increase the complexity of a firm’s regulatory requirements and create additional demands on its compliance function.
Interim support can help firms manage these transitions, strengthen governance arrangements and respond to new regulatory demands while considering the most appropriate longer-term structure.
A requirement that does not justify a full-time permanent role
Smaller firms, or firms at an earlier stage of growth, sometimes need access to experienced compliance professionals without requiring that level of resource on a permanent basis.
Fractional or part-time compliance support can provide proportionate access to expertise, with the level of involvement tailored to the firm’s regulatory obligations, risk profile and operational needs.
The important consideration is whether the arrangement provides sufficient capacity, appropriate accountability and effective oversight.
Authorisation or a change in regulatory permissions
Firms seeking FCA authorisation or applying to vary their existing permissions may need additional compliance expertise to support the application process and prepare for ongoing regulatory obligations.
Specialist advisory support can help firms understand authorisation requirements, develop appropriate frameworks and prepare their applications. Interim compliance resource can provide additional capacity to support implementation, operational readiness and the transition to ongoing compliance arrangements.
Where senior management approval is required, firms must ensure that the proposed arrangements meet the applicable regulatory requirements.
What are the warning signs that additional compliance support is needed?
In our work with regulated firms, we often see additional resource becoming necessary when existing compliance responsibilities begin to compete with new regulatory or operational demands.
Some common indicators include:
- Temporary arrangements becoming prolonged. Senior compliance responsibilities are being covered on an interim basis without a clearly documented longer-term plan.
- Outstanding compliance actions. Remediation or monitoring activities are progressing more slowly because existing team members lack capacity.
- Competing regulatory priorities. New requirements or supervisory deadlines are placing additional pressure on business-as-usual compliance activities.
- Concentrated expertise. Important responsibilities or specialist knowledge depend on a small number of individuals, creating challenges during periods of absence or increased workload.
- Recruitment taking longer than anticipated. Permanent recruitment is ongoing, but the firm has not established how key responsibilities will be managed in the meantime.
Individually, these challenges may be manageable. However, where several arise together, firms should consider whether their current resourcing arrangements remain appropriate.
The objective is not necessarily to increase permanent headcount, but to ensure the compliance function has the capacity and expertise required to operate effectively.
What should firms consider before appointing interim compliance support?
Effective compliance resourcing is not simply about filling a vacancy. It involves understanding the firm’s requirements and identifying the most appropriate form of support.
The right approach depends on the nature of the requirement, the firm’s existing capabilities and how long additional support is likely to be needed.
Four considerations can help firms determine the right approach.
- Scope and responsibilities
Establish what the interim professional will be responsible for, the expected outcomes and how their role will interact with the existing compliance function.Where the appointment involves regulated responsibilities, firms should also consider the relevant approval and accountability requirements.
- Relevant sector and regulatory expertise
The individual should have experience appropriate to the firm’s business model, regulatory permissions and specific requirements.For example, the expertise needed to support an e-money institution through safeguarding remediation may differ from that required to oversee financial crime compliance within an investment firm.
- Integration and oversight
Interim resource should operate within clearly defined governance arrangements, with appropriate reporting lines, escalation procedures and access to senior management.Additional capacity should strengthen the existing compliance function rather than create uncertainty around ownership or accountability.
- Duration and handover
Firms should consider how long support is likely to be required and what happens when the engagement ends.This may involve handing responsibilities to a permanent appointment, transitioning activity back to the existing team or moving to an ongoing fractional arrangement.Agreeing these arrangements early helps maintain continuity and retain knowledge within the business.
Interim compliance readiness check
Can your firm answer yes to the following?
- Do we have a documented contingency plan for the unexpected departure or prolonged absence of a senior compliance professional?
- Have we identified which responsibilities would require immediate cover?
- Do we understand the regulatory approval requirements that could apply to an interim appointment?
- Could our existing compliance team maintain effective oversight during a prolonged absence or unexpected increase in workload?
- Do we have access to appropriately experienced interim resource if needed?
- Have we established how interim responsibilities would be governed, monitored and handed over?
If several answers are unclear, it may be worth reviewing your compliance resourcing arrangements before a vacancy or additional regulatory demand arises.
How can ComplianceGuard support your firm?
ComplianceGuard, part of the fscom Group, provides experienced compliance professionals to regulated financial services firms requiring interim capacity, specialist expertise or additional senior oversight.
From interim MLROs and Heads of Compliance to financial crime specialists and fractional support, ComplianceGuard works alongside firms’ existing teams to help maintain continuity and respond to changing regulatory and business requirements.
Combined with fscom’s wider advisory and assurance expertise, this gives firms access to both specialist regulatory guidance and practical delivery support. Whether the requirement involves a temporary vacancy, a remediation programme or additional capacity during business growth, firms can access support tailored to their circumstances.
If your firm requires additional compliance capacity or is reviewing its resourcing arrangements, get in touch with our team to discuss the most appropriate support for your needs.
