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EUROs or DOLLARS: The Minimum Capital Requirements for Investment Firms in Liechtenstein
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In a move aimed at strengthening financial stability, the Financial Market Authority (FMA) has announced that investment firms operating in Liechtenstein must have a minimum capital of 730,000 Swiss francs or its equivalent in euros or US dollars. This new requirement is part of the country’s efforts to regulate the financial sector and ensure the integrity of its banking system.
Rules Governing Bank-Customer Relationships
In Liechtenstein, there are no specific laws governing the relationship between banks and their customers. Instead, the general rules and provisions on contracts and legal transactions outlined in the country’s Civil Code will apply. This means that banks must comply with standard contract law principles when dealing with their clients.
Contract of Mandate
One type of contract commonly used in banking is the contract of mandate. Under this arrangement, a bank or investment firm acts as an agent on behalf of its client, undertaking specific tasks and transactions. The agent has a duty to act diligently and honestly, and must transfer any benefits arising from the transaction to the principal.
General Terms and Conditions
Banks in Liechtenstein typically have their own General Terms and Conditions that govern their relationships with customers. These terms must meet certain criteria to be valid and applicable. For example:
- Unusual provisions that are detrimental to the customer may not form part of the contract unless the bank has explicitly brought them to the customer’s attention.
- All general terms and conditions must be in writing, clear, and easily understandable by the customer.
Cross-Border Banking Activities
Liechtenstein banks must have a license issued by the FMA in order to operate in the country. However, banks from other EU countries may also provide banking services in Liechtenstein under the freedom to provide services principle, as long as their home country’s competent authority has notified the FMA prior to their first-time activity in Liechtenstein.
Conciliation Board
In a move aimed at resolving disputes between customers and banks more efficiently, the Liechtenstein government has introduced an extrajudicial conciliation board. This board acts as a mediator to resolve complaints submitted by customers, encouraging discussions between the disputing parties and leading them to a mutually acceptable solution. However:
- Neither party is bound to accept any generated solution.
- They remain free to take further legal action if necessary.
Conclusion
Overall, these new requirements aim to strengthen financial stability in Liechtenstein while also protecting the rights of bank customers.