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Switzerland’s Financial Regulatory Bodies: An Overview of FINMA

In Switzerland, the financial markets are regulated by FINMA, an independent body responsible for supervising banks, insurance companies, and other financial institutions. With a mandate to protect creditors, investors, and policyholders, FINMA ensures that Switzerland’s financial markets function effectively.

Establishment and Governance

FINMA was established on January 1, 2009, with a greater degree of independence than its predecessor institutions. This allows it to exercise effective supervision over the country’s financial industry. The body is governed by a board of directors and managed by an executive board, with strong corporate governance in place to ensure credibility and accountability.

Financial Independence

FINMA’s functional independence means that it is not subject to political authority. Neither the Swiss Parliament nor the government can issue directives on how it carries out its regulatory duties. However, the body remains accountable to parliamentary commissions overseeing its work.

Funding

The agency is financed through levies and fees charged for its supervisory work. Institutions regulated by FINMA are required to pay an annual levy to cover costs not met by fees. FINMA’s accounts are audited by the Swiss Federal Audit Office.

Mandate

FINMA’s mandate includes:

  • Authorizing, supervising, and enforcing supervisory law
  • Regulating activities where authorized
  • Adopting a systematic risk-oriented approach
  • Prioritizing continuity and accountability to strengthen confidence in Switzerland’s financial centre

Organizational Structure

The Board of Directors draws up strategic goals every four years, which are submitted to the Federal Council for approval. FINMA has an organizational structure with a clear distinction between strategic management through the Board of Directors and operational management through the Executive Board.

Cooperation

To meet its objectives, FINMA:

  • Delegates part of its supervisory work to audit firms
  • Appoints agents on a case-by-case basis
  • Fosters national cooperation
  • Represents Switzerland in competent specialist committees internationally
  • Responds to requests for assistance from foreign supervisory authorities as needed

Conclusion

In summary, FINMA plays a critical role in regulating Switzerland’s financial markets, ensuring the protection of creditors, investors, and policyholders while promoting the effectiveness and integrity of the country’s financial centre.