Concerns remain over recruitment, tax and regulatory issues
Research conducted by Smith & Williamson, the accountancy and investment management group, has revealed that the financial sector has seen steady growth in annual turnover, with 59% of respondents reporting an increase in turnover over the last twelve months. In addition, 45% of those surveyed expect to make more hires over the next year and only 6% plan to reduce their workforce, compared to a much higher 20% last year. Respondents were mainly drawn from the investment management, banking and securities sector.
Colin Aylott, head of Smith & Williamson's financial services and markets group, comments: "The sector appears far more buoyant than in previous years, although many firms do continue to feel the pressure on both costs and fees. In addition, when it comes to firms looking to hire additional staff, the competition for high-quality employees could make attracting and recruiting suitably qualified people challenging. Indeed, 43% of firms reported that recruiting and retaining suitably qualified staff is a key concern."
This year, regulation was the number one concern for respondents for the first time since 2010, with nearly two thirds of respondents expecting regulatory requirements to have the most impact on their business, and 40% anticipating that revenues will be affected.
Colin says: "With the overarching aims of consumer protection and market stability, regulatory complexity is unlikely to reduce in the short term. Significant changes in regulation have, and will, occur in 2014, with yet more change anticipated in 2015. As regulation becomes increasingly complex, financial services business will continue to face more elaborate requirements to demonstrate compliance, which is likely to increase time spent and costs; over three quarters of those surveyed anticipate higher compliance costs as a result of regulatory change."
For the second year running, interviewees have identified UK corporation tax as the biggest tax issue facing their business. Income tax, VAT and employment taxes also rank highly as key taxes affecting the financial sector.
Colin observes: "Despite respondents' reservations, the 'swings and roundabouts' of all the UK's taxes combined has, in many cases, had the net effect of a slight reduction in the overall tax burden of late. Given this, although tax is getting more and more complicated, the UK remains a relatively good place to do business."
About the survey
119 individuals representing businesses from the financial services sector participated in this year's Smith & Williamson financial services and markets group survey.
By necessity, this briefing can only provide a short overview and it is essential to seek professional advice before applying the contents of this article. No responsibility can be taken for any loss arising from action taken or refrained from on the basis of this publication. Details correct at time of writing.
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