News & Articles

It's All In A Name

28th December 2009
Lee Werrell

Are you a Financial Services Compliance Consultant or Independent Contractor?

Although a euphemism for temporary workers, particularly in the UK and other financial service markets, there is an important distinction between the two. An Independent Contractor who purports to be a Consultant could be opening up a can of worms regarding their own reputation, validity of their PI insurance and technically being a potential liability as far as regulatory interpretation may be concerned.

The word consultant comes from the Latin "consultare" which means "to discuss" from which we also derive words such as counsel and is defined as a professional who provides advice in a particular area of expertise such as accountancy, the environment, technology, law, human resources, marketing, medicine, finance, communication, engineering, waste management, regulatory or public affairs.

Consulting has come under some criticism because of staff augmentation and the high amount of jargon consultants use, also known as consultantese. Any good Consultancy in the 21st Century will be transparent and try to eradicate any areas of miscommunication or potential misunderstanding by using plain English.

A consultant is typically self-employed or works for a consultancy firm, which is a company that provides consultants to clients on a larger scale or in multiple, though usually related, skill areas and usually with multiple and often changing clients. Thus, clients have access to deeper and broader levels of experience and specialism than would be feasible for them to retain in-house, and to purchase only as much service is required from the external consultant. It is generally accepted good corporate governance to hire consultants as a check against the Principal-Agent problem.

Generally a consultant provides expertise to clients who require a particular type of knowledge or service for a specific period of time, thus providing an economy to the client.

In other situations, companies implementing a major project may need additional experienced staff to assist with increased work during that period. This has lead more recently to the term being used for temporary staff or contractors. That resource is only temporarily employed by a company to augment the company's core set of employees without providing any particular or unique expertise. This usually indicates that the contractor could be expended when demand for that particular skill diminishes, though this expendability is usually recompensed with higher pay.

In both cases the consultant or contractor is usually employed through a limited company which they themselves own, or through an umbrella company. Self Employed Independent Contractors and Consultants have to be mindful of tax restrictions and limitations, and ensure they fulfil the requirements to demonstrate their true occupation.

Consultancy provides an opportunity for a Consultant to be a subject matter expert and build a reputation as such.

This also has further advantages to both the client and the consultant by:

• Providing a pool of talent that can be quickly mobilized as required
• Reassuring the client about the quality of the consultants supplied
• Giving the client access to the experience and methodologies of the whole consultancy rather than an individual
• Introducing the consultant to new experiences and techniques which may, eventually, permeate through the consultancy as a whole

Independent Contractors, whilst not generally called upon for advice or consultation on strategy also provide valuable experience that, through normal communication pathways can raise concerns of suggestions through to the consultant or consultancy. Having experienced and knowledgeable contractors on the ground, with an eye for the subject at hand, is a valuable and often overlooked tool within consultancy bags of tricks.

CEI Compliance are always looking for serious Consultants and Independent Contractors who are able to work alone or as part of a team. They should specialise in UK Financial Services Risk and Compliance, be a UK/EU citizen and have at least 5 years experience. Whilst Contractors will be expected to hold the basic advice qualifications for the industry, Consultants will also need these and to be further qualified and in addition, have accurate and current CPD records available.

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Lee Werrell FInstSMM MSI is the Owner and Principal Consultant of CEI Compliance Limited, a Compliance Consultancy. CEI provide a broad range of expertise having worked with governance, risk and compliance functions for a number of years.