Switzerland Overhauls Financial Market Legislation: Banking Compliance Rules Take Center Stage

In a bid to bolster financial stability and investor protection, Switzerland has comprehensively revised its financial market legislation. The revamped framework, which came into effect on January 1, 2020, incorporates various Acts, including the Anti-Money Laundering Act (AMLA), Banking Act (BA), Financial Market Supervision Act (FINMASA), Financial Market Infrastructure Act (FMIA), Financial Services Act (FinSA), and Financial Institutions Act (FinIA) among others.

Enhancing Legal Certainty, Competitiveness, and Exportability

The new regulations aim to enhance legal certainty, competitiveness, and exportability of Swiss financial products and services. Key changes include:

• Stricter regulation of asset managers and trustees
• More detailed conduct rules for investment advice
• Extended prospectus requirements for financial instruments
• Creation of a solid legal framework

Investor Responsibility

Under the FinSA, investors are now expected to take greater responsibility for themselves. The Act consolidates existing duties previously scattered across various texts, case law, and circulars.

Notable Changes

• Stricter regulation of asset managers and trustees
• Enhanced conduct rules for investment advice, including documentation and transparency requirements
• Extended prospectus requirements for financial instruments
• Creation of a key information document for clients

Other Reforms

The Banking Act (BA) remains unchanged, while the Financial Institutions Act (FinIA) brings independent portfolio managers under prudential supervision.

Ordinances Enter into Force

In addition to the FinSA and FinIA, three ordinances entered into force on January 1, 2020:

• Financial Services Ordinance (FinSO): Outlines financial service providers’ consultation and information duties
• Financial Institutions Ordinance (FinIO): Contains implementing provisions for the authorisation of financial institutions
• Supervisory Organisations Ordinance (SOO): Governs the authorisation requirements for supervisory organisations overseeing portfolio managers, trustees, and assay offices

Industry Input

The Swiss Bankers Association played an active role in shaping the new regulations through its extensive input during the legislative process. While some industry concerns were addressed, others were not incorporated into the final texts.

Two-Year Transition Period

A two-year transition period applies to most duties under the FinSA and FinIA, allowing market participants sufficient time to adapt to the new regulations.

Conclusion

As Switzerland’s financial center looks to access foreign markets, these reforms provide a solid foundation for growth and stability. The revised framework is expected to enhance legal certainty, competitiveness, and exportability of Swiss financial products and services, while ensuring greater investor protection.