Why Your Compliance Hire Keeps Falling Through (And What to Do About It)

If you have been trying to fill a compliance role for longer than you expected — and the search keeps stalling, candidates keep withdrawing, or offers keep getting turned down — you are not experiencing bad luck. You are experiencing a pattern. And patterns have causes.

In our experience at Exec Capital, the reasons a compliance hire falls through are almost always identifiable in advance. The difficulty is that they tend to sit inside the hiring process itself rather than in the external market — which makes them harder to see when you are in the middle of them. This guide works through the causes we see most often, from an overloaded brief and an out-of-date salary range to a regulatory approval step that nobody built into the timetable, and sets out what to do about each one. It applies whether you are hiring a Head of Compliance, an MLRO, a Compliance Director or an interim cover appointment, and whether or not the role carries a Senior Manager Function.

The Brief Is Doing Too Much Work

The most common single cause of a compliance hire that keeps failing is a job brief that is trying to solve too many problems at once.

Compliance roles accumulate requirements over time. A vacancy gets signed off, the hiring manager adds their priorities, HR adds standard language, the legal team adds liability-driven clauses, and by the time the brief reaches the market it describes a candidate who does not exist — or who exists but is already earning significantly more than the budgeted salary.

A typical over-engineered brief asks for one person to be the firm’s SMF16 compliance oversight holder, run financial crime as MLRO, own the regulatory change programme, write the policies, deliver the training, sit on the risk committee and handle complaints, all at a mid-market salary. Each of those requirements is reasonable on its own. Together they describe two or three jobs. The candidates who could genuinely do all of it are either senior enough to expect a much larger package, or already doing a similar role somewhere with more support.

The fix is straightforward in principle and harder in practice. It requires someone with authority to sit down with the brief and ask honestly: what does this person actually need to do in their first twelve months? What is genuinely essential, and what is aspirational? A focused brief that accurately describes a real role attracts candidates who want that role. An over-engineered brief attracts candidates who are stretching to meet it — and who will look elsewhere when something more appropriate comes along.

A useful test is to split the requirements into three columns: what the regulator expects of the role, what the business needs in the next year, and what would be nice to have. The first column is fixed. The second sets the level of the hire. The third should be dropped from the advert and kept as a development conversation. If the first two columns still describe more than one role, that is a structural decision for the board — whether to split the work between a Head of Compliance (SMF16) and a separate MLRO, for example — not something the search can solve on its own.

The Salary Range Is Behind the Market

Compliance pay across FCA-regulated firms has had to keep pace with sustained demand for experienced people. Regulatory change has not slowed, the pool of candidates who have held senior compliance roles at authorised firms is finite, and the wider repricing of skilled roles over recent years means that benchmarks a few years old are often below what the market will now bear.

Firms that set salary ranges based on what they paid the last person in the role, or on internal pay band structures that have not been refreshed, tend to find candidates who are enthusiastic through the interview process and then quietly disappear when the offer lands. They do not always say the salary was the reason. But it usually was.

The most reliable way to avoid this is to get a current market read before briefing the search — not after shortlisting. A good compliance recruitment agency should be able to give you a specific, honest view of what candidates at your target level are currently earning and expecting. If the number is higher than your budget, it is better to know that before you have invested three months in a search that was always going to fail at offer stage.

Base salary is rarely the only issue. Senior compliance candidates look closely at bonus structure (and whether a compliance bonus is tied to commercial targets, which many will not accept), notice period buy-outs, flexibility and, for approved roles, whether the firm will support them through the approval process. A package that is slightly below market on base but clear and fair on everything else can still close. A package that is below market and vague on the rest usually will not. If the budget genuinely cannot move, the alternatives are to narrow the brief so it fits a less senior hire, or to change the model — a fractional or interim appointment can buy senior judgement for the days you need it.

The Process Is Too Long

Compliance professionals — particularly at senior level — are in active demand. A process that runs to four interview stages over ten or twelve weeks will lose candidates. Not necessarily because they receive a competing offer, though that happens frequently. Sometimes they simply conclude that an organisation that cannot make a hiring decision is unlikely to be one where compliance is given the decisiveness it needs to function effectively.

The signal a slow process sends is at least as damaging as the attrition it causes. Two structured interview stages with a clear decision point at the end of each is sufficient for almost any compliance appointment. Anything beyond that is usually a sign that the decision-making authority within the firm is not properly aligned — which is a process problem to solve internally, not by extending the candidate’s patience.

In practice, that means agreeing before the search starts who sits on each panel, who has the final say, what the assessment criteria are and how quickly feedback will be given. Put interview dates in diaries before the shortlist arrives. If the CEO or a non-executive needs to meet the finalist, book that slot in advance rather than waiting for availability. Small delays compound: a week lost arranging a second interview and another week waiting on a board member is often enough for a strong candidate to accept something else. Our compliance and risk recruitment team agrees the process and timetable with the client at the briefing stage for exactly this reason.

The Role Has Not Been Sold

Strong compliance candidates are not passively waiting for offers. They are assessing opportunities carefully, and they have a clear idea of what a good role looks like. When a hiring process treats the interview entirely as an assessment of the candidate rather than a two-way exchange, senior compliance professionals notice.

What does the firm’s regulatory history look like? What is the relationship between the compliance function and the board? Is there genuine commitment from senior leadership, or is compliance expected to achieve outcomes without the resource or authority to do so? These are reasonable questions, and firms that answer them openly — including the less comfortable parts — consistently close more strongly than firms that present an uncritical picture.

This matters more in compliance than in most functions because the person taking an approved role carries personal accountability. Under the Senior Managers and Certification Regime, an SMF holder can be held responsible for failings in their area. Experienced candidates will want to see the firm’s Management Responsibilities Map, understand what is in the Statement of Responsibilities they would sign, and know whether there are open regulatory issues, past enforcement or skilled person reviews. A firm that is evasive on those points is asking the candidate to accept personal risk without the information to assess it.

The candidate who joins knowing exactly what they are walking into is also significantly more likely to stay. Which means selling the role honestly is not just a closing tactic. It is the foundation of a hire that actually works.

The Regulatory Approval Has Not Been Planned For

Many compliance hires fall through after the offer has been accepted, because the firm did not plan for the FCA approval step. If the role is a Senior Manager Function — SMF16 compliance oversight or SMF17 money laundering reporting, for example — the candidate cannot simply start doing it. The firm must apply for approval using Form A, and the FCA says it must decide on an application within three months of receiving it. That period can run longer if the FCA asks for more information or holds an interview, because it can stop the clock while it waits.

Timing is improving. In 2025 the FCA set faster targets for authorisations, including a target to complete at least half of senior manager applications within 35 days, measured from January 2026, and noted the Government’s proposal to cut the statutory deadline from three months to two. That shorter deadline is a proposal rather than current law, so a sensible plan still allows for the full period. The most common avoidable delay is an incomplete application: the FCA expects firms to submit a full and complete application on day one, with the regulatory references, criminal records check and supporting evidence of fitness and propriety already in hand.

The practical points are simple. Start collecting regulatory references as soon as an offer is agreed. Make sure the candidate understands what the FCA will look at, and raise anything in their history early rather than discovering it on the form — our guide to fitness and propriety covers what is assessed. Build the approval period into the start date and the notice period conversation. And decide in advance who will cover the role in the meantime.

The 12-week rule and interim cover

When a senior manager leaves or is absent unexpectedly, the 12-week rule allows someone to cover the function temporarily without prior approval. This changed in April 2026. Under the FCA’s PS26/6, firms now have 12 weeks to submit an application, rather than 12 weeks to submit it and obtain approval, and the person covering can continue in the role until the FCA determines the application. The Senior Manager Conduct Rules apply to whoever is providing that cover. The application can be for the permanent candidate, or for an interim where the permanent search will take longer than 12 weeks.

This gives firms more room than before, but it does not remove the need to plan. If the permanent search stalls, an interim Chief Compliance Officer who has held the function before can be put forward for approval while the search continues. Where a gap has already opened, our urgent SMF appointment service is designed for that situation.

Counter-Offers and Notice Periods Are Ignored

A compliance professional who is good enough to hire is usually someone their current employer does not want to lose. When they resign, a counter-offer is common, and for an approved person the current firm also faces its own replacement and approval problem, which gives it every reason to try to keep them. Many accepted offers are lost in the weeks between resignation and start date.

The answer is to raise the subject openly at interview: ask what would keep them where they are, and listen to the answer. Keep in regular contact during the notice period, introduce them to the team, share the onboarding plan and involve them in the approval application. Senior compliance notice periods of three or six months are common, so the gap between offer and start can be long enough for a candidate to drift. Firms that treat the notice period as part of the hiring process lose far fewer people than firms that go quiet once the contract is signed.

The Hiring Model Does Not Fit the Need

Sometimes a search fails because it is looking for the wrong kind of hire. A small firm with a light regulatory footprint may advertise a full-time Head of Compliance at a salary that only attracts people without the experience to hold the function, when what it actually needs is an experienced practitioner two days a week. A larger firm in the middle of remediation may need a permanent leader eventually but an interim specialist now, because the remediation work and the steady-state role call for different people.

Before relaunching a stalled search, it is worth asking whether permanent, interim or fractional is the right model for the next twelve months. Fractional compliance leadership can give a smaller firm senior oversight at a cost it can sustain. Interim leadership can stabilise a function and hand over to a permanent hire once the issues are resolved. Our guide on how to hire a Chief Compliance Officer sets out the questions boards should answer before choosing.

What to Do If You Are in This Position Now

If your compliance search has already stalled, the starting point is an honest diagnosis. Is the brief too wide? Is the salary misaligned? Is the process too long? Is there something about the role or the firm that is not being communicated clearly? Has the approval step been planned for, and is the hiring model right?

Most failing searches can be recovered if the root cause is identified quickly and addressed directly. The ones that cannot be recovered are the ones where the same process is repeated with the same brief and the same expectations, and the outcome is attributed to the market rather than to the approach.

A practical reset usually looks like this:

• Review why candidates dropped out. Go back to every withdrawal and declined offer and ask what happened. The pattern is usually obvious once it is written down.
• Rewrite the brief. Separate regulatory requirements from first-year priorities and drop the nice-to-haves.
• Re-test the package. Get a current market view of base, bonus and terms for the level you actually need.
• Fix the process. Two stages, named decision-makers, dates in diaries and feedback within days.
• Plan the approval. Line up references and supporting evidence early, and decide who covers the function in the meantime.
• Consider interim or fractional cover. It can protect the firm while the permanent search is done properly.

If you would like a second opinion on a search that is not closing, our compliance recruitment team works with FCA-regulated firms on exactly these resets, from the brief through to approval and onboarding.

Frequently asked questions

Why do compliance candidates withdraw late in the process?

The usual reasons are a package that does not match the market, a process that has run too long, a counter-offer from their current employer, or unanswered questions about the firm’s regulatory position and the personal accountability that comes with the role.

How long does FCA approval take for an SMF16 or SMF17?

The FCA says it must decide within three months of receiving an application, although this can be extended if it needs more information or holds an interview. It has set a target to complete at least half of senior manager applications within 35 days. A complete application on day one is the best way to avoid delay.

Can someone cover a compliance SMF while we recruit?

Yes, where the absence is temporary or unforeseen. Since April 2026 the 12-week rule gives firms 12 weeks to submit an application, and the person covering can continue until the FCA makes its decision. The Senior Manager Conduct Rules apply to them during that period.

Should we split the Head of Compliance and MLRO roles?

It depends on the size of the firm and the financial crime risk. Many smaller firms combine them successfully, but if the brief is failing because it asks one person to do too much, splitting the roles or using fractional support for one of them is often the fix.

Is there further SMCR reform on the way?

Yes. In October 2026 the FCA published CP26/37, its Phase 2 consultation, which includes proposals to streamline the SMF application process and remove some SMFs. It closes in January 2027, so firms should plan current hires on the rules as they stand.