WHEN a trade association’s secretary puts on a display of an oriental martial art called Wuchia to the accompaniment of the Pink Panther theme tune in front of 300 members quaffing champagne at London’s Dorchester hotel, there must be something to celebrate.

Yet the guests at the gathering a few weeks ago were not ostentatious actors, or even flamboyant entrepreneurs. They were members of one of the City of London’s greyest groups — compliance officers.

To their more gung-ho colleagues in the financial sector, this strait-laced group is little more than a regulatory irritant, more interested in stopping them making money than helping them. Nevertheless, compliance officers are now in huge demand, helping to protect their employers from falling foul of Britain’s increasingly tough and intrusive regulatory system.

Banks, life assurers, fund managers, stockbrokers, independent financial advisers, foreign-exchange trading houses and spread-betting bookmakers are all now regulated by the Financial Services Authority (FSA), the financial watchdog. As a result, they all need at least one compliance officer and, in the case of the largest firms, a compliance department consisting of scores of people.

Despite vows by politicians to cut red tape, the burden just keeps growing. Last week the government’s Better Regulation Task Force revealed that red tape costs British businesses more than £100 billion a year.

This culture keeps the boom in financial compliance going. From next Sunday, some 10,000 mortgage firms will be regulated, and from January 14, so will an estimated 15,000 firms that advise on motor and household insurance. All of them will be forced to spend money to ensure that they comply with FSA rules.

The result is that compliance has become one of Britain’s fastest-growing industries, with some experts suggesting it employs 40,000 people.

Peter Breeze, at the City employment specialist Morgan McKinley, said: “Compliance staff probably make up a 5%, and growing, proportion of all financial-services recruitment.

“Salaries are also rising. The profile of a compliance professional has never been higher. The head of compliance at a large bank could earn at least £250,000 a year.”

Ben Goh, secretary of the Compliance Register, estimates that the number of compliance officers in Britain has increased by 50% in the past five years.

“I think you are talking about more than 30,000 people at all levels in compliance in the UK now, and if you add in money-laundering personnel, probably a total of 40,000,” he said.

Goh, whose organisation hosted the bash at the Dorchester last month, said he knew of some large banks with compliance departments of up to 150 people, and one network of independent financial advisers with 80 compliance personnel.

The banking giant HSBC estimates that its compliance costs are £400m a year to meet the regulations in all the countries in which it operates. An executive at one American investment bank in the City said compliance was “not resource constrained” — in other words, it is given whatever money it needs.

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