Financial Crime World

New Regulatory Framework in Switzerland: Key Developments under FinSA and FinIA

The Swiss Financial Services Act (FinSA) and Financial Institutions Act (FinIA) have introduced significant changes to the regulatory framework for financial institutions in Switzerland. This article highlights the key developments that impact various types of financial service providers.

Changes to the Definition of an Offer

  • The definition of an offer is now more restrictive, allowing for more scope for pre-marketing by speaking with high net worth individuals about a fund idea without having to appoint a Swiss representative.
  • Pre-marketing is admissible prior to appointing a Swiss representative and paying agent, but the FINSA rules applicable to marketing still apply, including registration as a client advisor and affiliation with an ombudsman where no exemptions apply.

Regulation of Various Financial Institutions

The regulatory provisions for licensing and running financial institutions have been consolidated in FinIA. Key conditions for obtaining and maintaining an authorisation include:

  • Effective management in Switzerland
  • Assurance of irreproachable business conduct
  • Prudential supervision of delegates

Portfolio Managers

Portfolio managers are defined to include all persons mandated to manage assets on a commercial basis in the name of and on behalf of the client. They must apply to FINMA for their authorisation, with ongoing supervision taking place at the lower level by a new form of supervisory authority.

Asset Managers of Collective Assets

Swiss asset managers of collective investment schemes need to obtain an authorisation from FINMA and will continue to be subject to supervision for as long as they carry out the activity in Switzerland.

Fund Management Companies

Granting of the authorisation and prudential supervision remains entirely FINMA’s responsibility, with no major changes reported in connection with the regulatory conditions to obtain a fund management company license.

Securities Firms

The material conditions for licensing have not undergone any material changes, aside from consolidation under FinIA.

Transitional Regime and Timescales

A transitional period of two years has been introduced for financial service providers to implement the FinSA conduct and organisational rules, including the new client segmentation rules, expiring on 31 December 2021.