When Compliance Officers Leave: Why Churn Signals Opportunity for RegTech in 2025

What does high churn in compliance oversight roles tell us about the financial services landscape? In 2024, the FCA’s SMF16 function—responsible for ensuring regulatory compliance—saw significant turnover, with some segments like building societies reaching a 35.7% churn rate. This isn’t just a staffing issue or an opportunity for recruiters; it’s also a signal for regtech and compliance firms. High turnover can highlight segments under regulatory pressure, creating opportunities to pitch solutions to new leaders eager for change.

The signal

Churn in the SMF16 role is a marker for business opportunities, especially for firms offering compliance and regtech solutions, for two key reasons.

1. New mandates for change: High turnover often means a new SMF16 steps into the role with a mandate for remedial works. This creates a window for regtech and compliance firms to pitch solutions. However, targeting areas with high churn can be double-edged; new leaders may disrupt existing relationships, potentially leading to cancelled subscriptions and impacting customer lifetime value.

2. Regulatory complexity as a driver: High churn can signal that a segment is particularly challenging from a compliance perspective. Building societies and banks, with their elevated turnover, may be grappling with Consumer Duty’s focus on retail outcomes or heightened scrutiny in areas like AML. As the saying goes, “where there’s muck, there’s brass”—these segments may be more likely to invest in products and services to mitigate risks and reduce personal liability.

Where is churn happening?

Mostly banks. The first chart shows the percentage of SMF16s who left their roles in 2024 by six major market segments, calculated by tracking active SMF16s at the start of the year and noting how many ceased the role by year-end.

A note on the analysis: I’ve focused on firms that have continued to trade into 2025, shifting the focus to the function rather than growth or shrinkage in a particular market segment—so churn related to company deaths is not reflected in these charts.

Banks lead with a 23.4% churn rate, meaning that of the 400+ SMF16s at banks (which includes building societies) at the start of 2024, nearly a quarter ended their role during the year. Banks are followed by product providers at 20.4% and insurance at 16.4%. Investment and advice, credit, and mortgage segments see lower turnover.

The subsegments are more granular classifications that compromise the segments. For this analysis, I restricted it to market subsegments with at least 40 roles at the start of 2024.

Building societies top the list at 35.7% churn. There were a little over 40 building society SMF16s in-scope for the analysis, meaning that the high churn percentage will partially be a factor of the smaller sample size, where a little variability can have more impact. Building societies are followed by corporate banking (27.9%) and retail/business banking (24.7%). Investment-related subsegments show relatively lower churn.

What’s driving the churn?

It’s a hard question. The data gestures to higher churn in areas involving retail customers, suggesting potential pressure to comply with standards such as Consumer Duty. Firms providing retail banking services, such as building societies (35.7%) and retail/business banking (24.7%), fit this narrative. However, the low churn of SMF16s in credit and mortgage firms muddies the waters.

On a related and surprising note, investment and advice (9.1%) has lower churn, despite increased scrutiny on fees and transparency for wealth managers and advisors that make up part of this category.

Further complicating the picture is that banks are required to have an SMF16, creating a larger and more dynamic job market with opportunities for movement as professionals chase better roles. So churn may not be an entirely negative phenomenon in these areas—at least from the perspective of an individual.

Trading the signal

While causality is hard to pin down, the data suggests an opportunity: target banks, product providers, and insurance firms with solutions that ease the burden on SMF16s and you’ll likely find a receptive audience in 2025.

But there’s a catch: high churn means would-be providers must adapt to shorter sales cycles and build flexible onboarding to accommodate more frequent leadership changes. In a churning world, firms that can demonstrate quick ROI will have an edge.