Financial Crime World

Switzerland’s Financial Regulation Compliance Overhaul Brings Greater Clarity and Investor Protection

Introduction

Switzerland has undergone a significant overhaul of its financial market legislation, introducing new regulations to enhance investor protection and improve the competitiveness of its financial sector. The revamped framework includes several key acts and ordinances that aim to provide greater clarity and certainty for financial service providers and their clients.

Key Changes

The Financial Services Act (FinSA) and Financial Institutions Act (FinIA) have introduced several key changes, including:

  • Stricter regulation of asset managers and trustees
  • Enhanced conduct rules for investment advice
  • Extended prospectus requirements
  • Organizational measures to ensure client advisers are properly trained
  • A solid legal framework providing greater legal certainty

Impact on the Financial Sector

The implementation of the FinSA and FinIA is expected to have a positive impact on Switzerland’s financial sector, enhancing its competitiveness and exportability. The two acts were passed by Parliament after a five-year legislative process and took effect on January 1, 2020.

Industry Expert Insights

Industry experts welcome the new regulations, citing increased transparency for customers and a focus on investors taking responsibility for themselves. The Swiss Bankers Association played an active role in the legislative process, providing input and feedback throughout the consultation phase.

Ordinances and Implementation Timeline

The FinSO and FinIO ordinances, which also came into effect on January 1, 2020, flesh out financial service providers’ consultation and information duties, as well as their organizational requirements. The Supervisory Organisations Ordinance (SOO) governs the authorisation requirements for and activities of newly created supervisory organisations.

  • A two-year transition period applies to most of the duties under the FinSA and FinIA, allowing market participants time to adapt to the new regulations.
  • The implementation timeline is as follows:
    • January 1, 2020: FinSA and FinIA come into effect
    • January 1, 2022: Two-year transition period ends

Conclusion

Switzerland’s financial regulation compliance overhaul aims to provide greater clarity and investor protection while improving the competitiveness of its financial sector. The new regulations are expected to have a positive impact on the industry, and market participants have a two-year window to adapt to the changes.