Compliance Requirements for Financial Advisors in Switzerland Take Effect

As of August 1st, financial service providers that are not subject to prudential supervision in Switzerland must now register their client advisors with an authorized registration body under the country’s Financial Services Act.

What You Need to Know

• The registration body, licensed by FINMA (Swiss Financial Market Supervisory Authority), is responsible for managing the advisor register and deciding which advisors can be added or deleted.
• Advisors listed on the register must notify the registration body of any changes to their personal information or business conduct.
• Financial service providers that are required to register with an advisor register include those offering financial services in Switzerland, as well as foreign firms providing services to clients in Switzerland.

Who Needs to Register

• Banks and financial institutions with representative offices in Switzerland must now enter their advisors on the Swiss register if they plan to offer services to private clients.
• Foreign financial service providers that are subject to prudential supervision abroad do not need to register their advisors if they only provide services to professional and institutional clients. However, those who also offer services to private clients in Switzerland must enter their advisors on the Swiss register.

Requirements for Registration

• Advisors must meet certain standards of business conduct, including having a good reputation and necessary professional qualifications.
• The registration body is responsible for ensuring that advisors comply with these requirements.
• Advisors who fail to comply with these requirements may face revocation of their registration by FINMA.

Ongoing Monitoring and Intervention

• FINMA will not monitor the registration body on an ongoing basis, but will intervene if it becomes aware of any deficiencies in the register’s management.
• The first registration body was authorized by FINMA in July 2020, marking the beginning of a new era of compliance for financial advisors in Switzerland.

Why is Compliance Important?

• The changes aim to improve transparency and accountability in the financial sector, ensuring that Swiss investors have access to qualified and reliable financial advisors.
• With the new regulations now in effect, financial service providers and advisors operating in Switzerland are advised to familiarize themselves with the requirements and ensure compliance to avoid potential penalties.