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Switzerland Strengthens Compliance with International Financial Regulations

In a significant overhaul of its financial market legislation, Switzerland has established a robust framework for compliance with international financial regulations. The new architecture comprises six key acts and related ordinances that enhance transparency, investor protection, and competitiveness of Swiss financial products and services.

Key Features of the New Legislation

FinSA: Investor Protection in Focus

The Financial Services Act (FinSA) brings investor protection in Switzerland up to date by focusing on investors taking responsibility for themselves. The act introduces:

• Stricter regulation of asset managers and trustees: Enhancing oversight and ensuring that these entities adhere to strict standards.
• Enhanced conduct rules concerning investment advice: Strengthening the rules governing investment advice to protect investors from potential conflicts of interest.
• Extended prospectus requirements for financial instruments: Ensuring transparency and clarity in financial product offerings.
• Mandatory creation of key information documents: Providing investors with essential information about financial products.

FinIA: Prudential Supervision for Independent Portfolio Managers

The Financial Institutions Act (FinIA) subjects independent portfolio managers to prudential supervision, while retaining the Banking Act as special legislation. This ensures that these entities are held to high standards of prudence and risk management.

Regulatory Framework

In addition to the FinSA and FinIA, three ordinances flesh out financial service providers’ consultation and information duties, authorisation conditions, and supervision of financial institutions:

• Financial Services Ordinance (FinSO): Outlining consultation and information duties for financial service providers.
• Financial Institutions Ordinance (FinIO): Regulating authorisation conditions for financial institutions.
• Supervisory Organisations Ordinance (SOO): Overseeing the supervision of financial institutions.

Industry Response

The Swiss Bankers Association has scrutinized the drafts carefully throughout the legislative process, providing extensive input on the two legislative projects. The association has also welcomed the removal of civil proceedings provisions from the final version of the FinSA.

Timeline

A two-year transition period applies to most duties under the FinSA and FinIA. An overview of the timetable is available in an SBA news article.

Expert Insights

The new legislation aims to enhance Switzerland’s competitiveness and exportability of financial products and services, while strengthening compliance with international financial regulations. The robust framework established by the six key acts and related ordinances will provide a solid foundation for the Swiss financial sector.