Switzerland: New Laws On Financial Services

Key Points

  • Following the 2008 crisis, Switzerland launched a legislative project to create uniform competitive conditions for financial intermediaries and improve client protection.
  • Swiss Parliament adopted the FinSA on 15 June 2018.
  • The FinSA is part of the new financial market architecture and contains rules for offering financial services and distributing financial instruments.
  • On 24 October 2018, the Swiss Federal Counsel initiated the consultation on the ordinances containing the implementing provisions for the FinSA.
  • The FinSA is to enter into force together with the Counsel's implementing ordinances on 1 January 2020.

The background of the proposed rules

Following the 2008 crisis, Switzerland launched a legislative project to create uniform competitive conditions for financial intermediaries and improve client protection. The Financial Services Act (FinSA) is part of the new financial market architecture, which covers four areas:

  • Supervision, governed by the Financial Market Supervision Act, which entered into force on 1 January 2009
  • Infrastructure, governed by the Financial Market Infrastructure Act, which entered into force on 1 January 2016
  • Supervised entities (Financial Institutions Act)
  • Services (FinSA)

Key points of the FinSA

The rules of the FinSA are based on the EU directives (MiFID II, Prospectus Directive, PRIIPs), with adjustments to comply with specific Swiss circumstances. The FinSA contains cross-sector rules for offering financial services and distributing financial instruments. The purpose of the FinSA is to enhance the protection of the clients of financial services providers, to create a level playing field for the provision of financial services and to reinforce the Swiss financial market's reputation.

The FinSA's scope of application extends to any financial service providers, to client advisors, and to producers and issuers of financial instruments. Under the FinSA, a service provider has to comply with rules of conduct and organisational requirements. A client advisor has additional obligations, in particular, to follow specific training programs and to register with a register.

Financial services are defined as any of the following activities carried out for clients: acquisition or disposal of financial instruments, reception and transmission of orders in relation to financial instruments, portfolio management, investment advice and granting loans for transactions with financial instruments.

Client categorisation

The client classification determines the rules of conduct applicable to each category of client. A financial service provider will be required to distinguish between:

  • Retail clients: clients that are not professional clients
  • Professional clients: Swiss financial intermediaries, Swiss insurance companies, foreign clients subject to prudential supervision, central banks, public entities with professional treasury operations, occupational pension schemes with professional treasury operations, companies with professional treasury operations, large companies and private investment structures with professional treasury established for wealthy clients
  • Institutional clients: certain professional clients (Swiss financial intermediaries, Swiss insurance companies, foreign clients subject to prudential supervision and central banks).

Certain retail clients (wealthy clients and private investment structures established for them) may declare that they wish to be treated as professional clients (opting out). Professional clients that are not institutional may declare that they wish to be treated as retail clients (opting in). Therefore, different levels of protection will apply, depending on the type of client, with the possibility to choose a different level of protection.

Rules of conduct

The FinSA establishes rules of conduct for all financial services providers. These rules include an obligation to inform the clients prior to concluding any agreement, an obligation to verify if a financial instrument (or service) is suitable and appropriate, a documentation obligation and reporting duties, and transparency and due diligence requirements for the execution of client orders. These rules of conduct do not apply for transactions involving institutional clients.

Organizational requirements

Under the FinSA, financial service providers must comply with certain organisational requirements (appropriate governance and internal procedures to ensure a proper organisation), ensure that their staff possess the necessary skills, knowledge and experience to perform their work; and avoid conflicts of interest. Retrocessions are allowed, provided that they are fully disclosed to, and receipt thereof is waived by, the clients or if they are forwarded to the clients in full.

Register of client advisors

Client advisors of domestic financial services providers that are not subject to prudential supervision and client advisors of foreign financial services providers may perform services in Switzerland only if they are registered with a registration body that is licenced by the Swiss Financial Market Supervisory Authority FINMA.

Prospectus

The FinSA introduces uniform prospectus rules: any person who makes a public offer for acquisition of securities in Switzerland or any person who seeks the admission for trading of securities has the duty to publish a prospectus. The prospectus has to contain all material information for the investor's decision, in particular, the issuer, the guarantor and the security provider; the securities to be offered publicly or admitted for trading on a trading venue (i.e., the associated rights, obligations and risks for investors); and the offer (i.e., the type of placement and the estimated net proceeds of the issuance). The prospectus has to be submitted to a reviewing body prior to publication, and the completeness, coherence and understandability will be checked. The FinSA provides for a number of exceptions from the prospectus requirement, in particular, if the public offering is limited to professional clients, addressed to fewer than 500 investors and does not exceed an overall value of CHF 8 million over a
12-month period.

Key information document

The FinSA also introduces the obligation to draft a key information document (KID) for any offering of securities (other than equity securities and debt instruments without derivative elements) to private clients in Switzerland. The KID has to contain the information for making a well-founded investment decision and a comparison of different financial instruments.

Entry into force

It is currently expected that the FinSA is to enter into force together with its implementing ordinances on 1 January 2020.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

To print this article, all you need is to be registered on Mondaq.com.

Click to Login as an existing user or Register so you can print this article.

Authors
Similar Articles
Relevancy Powered by MondaqAI
 
Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Related Topics
 
Similar Articles
Relevancy Powered by MondaqAI
Related Articles
 
Up-coming Events Search
Tools
Print
Font Size:
Translation
Channels
Mondaq on Twitter
 
Mondaq Free Registration
Gain access to Mondaq global archive of over 375,000 articles covering 200 countries with a personalised News Alert and automatic login on this device.
Mondaq News Alert (some suggested topics and region)
Select Topics
Registration (please scroll down to set your data preferences)

Mondaq Ltd requires you to register and provide information that personally identifies you, including your content preferences, for three primary purposes (full details of Mondaq’s use of your personal data can be found in our Privacy and Cookies Notice):

  • To allow you to personalize the Mondaq websites you are visiting to show content ("Content") relevant to your interests.
  • To enable features such as password reminder, news alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our content providers ("Contributors") who contribute Content for free for your use.

Mondaq hopes that our registered users will support us in maintaining our free to view business model by consenting to our use of your personal data as described below.

Mondaq has a "free to view" business model. Our services are paid for by Contributors in exchange for Mondaq providing them with access to information about who accesses their content. Once personal data is transferred to our Contributors they become a data controller of this personal data. They use it to measure the response that their articles are receiving, as a form of market research. They may also use it to provide Mondaq users with information about their products and services.

Details of each Contributor to which your personal data will be transferred is clearly stated within the Content that you access. For full details of how this Contributor will use your personal data, you should review the Contributor’s own Privacy Notice.

Please indicate your preference below:

Yes, I am happy to support Mondaq in maintaining its free to view business model by agreeing to allow Mondaq to share my personal data with Contributors whose Content I access
No, I do not want Mondaq to share my personal data with Contributors

Also please let us know whether you are happy to receive communications promoting products and services offered by Mondaq:

Yes, I am happy to received promotional communications from Mondaq
No, please do not send me promotional communications from Mondaq
Terms & Conditions

Mondaq.com (the Website) is owned and managed by Mondaq Ltd (Mondaq). Mondaq grants you a non-exclusive, revocable licence to access the Website and associated services, such as the Mondaq News Alerts (Services), subject to and in consideration of your compliance with the following terms and conditions of use (Terms). Your use of the Website and/or Services constitutes your agreement to the Terms. Mondaq may terminate your use of the Website and Services if you are in breach of these Terms or if Mondaq decides to terminate the licence granted hereunder for any reason whatsoever.

Use of www.mondaq.com

To Use Mondaq.com you must be: eighteen (18) years old or over; legally capable of entering into binding contracts; and not in any way prohibited by the applicable law to enter into these Terms in the jurisdiction which you are currently located.

You may use the Website as an unregistered user, however, you are required to register as a user if you wish to read the full text of the Content or to receive the Services.

You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these Terms or with the prior written consent of Mondaq. You may not use electronic or other means to extract details or information from the Content. Nor shall you extract information about users or Contributors in order to offer them any services or products.

In your use of the Website and/or Services you shall: comply with all applicable laws, regulations, directives and legislations which apply to your Use of the Website and/or Services in whatever country you are physically located including without limitation any and all consumer law, export control laws and regulations; provide to us true, correct and accurate information and promptly inform us in the event that any information that you have provided to us changes or becomes inaccurate; notify Mondaq immediately of any circumstances where you have reason to believe that any Intellectual Property Rights or any other rights of any third party may have been infringed; co-operate with reasonable security or other checks or requests for information made by Mondaq from time to time; and at all times be fully liable for the breach of any of these Terms by a third party using your login details to access the Website and/or Services

however, you shall not: do anything likely to impair, interfere with or damage or cause harm or distress to any persons, or the network; do anything that will infringe any Intellectual Property Rights or other rights of Mondaq or any third party; or use the Website, Services and/or Content otherwise than in accordance with these Terms; use any trade marks or service marks of Mondaq or the Contributors, or do anything which may be seen to take unfair advantage of the reputation and goodwill of Mondaq or the Contributors, or the Website, Services and/or Content.

Mondaq reserves the right, in its sole discretion, to take any action that it deems necessary and appropriate in the event it considers that there is a breach or threatened breach of the Terms.

Mondaq’s Rights and Obligations

Unless otherwise expressly set out to the contrary, nothing in these Terms shall serve to transfer from Mondaq to you, any Intellectual Property Rights owned by and/or licensed to Mondaq and all rights, title and interest in and to such Intellectual Property Rights will remain exclusively with Mondaq and/or its licensors.

Mondaq shall use its reasonable endeavours to make the Website and Services available to you at all times, but we cannot guarantee an uninterrupted and fault free service.

Mondaq reserves the right to make changes to the services and/or the Website or part thereof, from time to time, and we may add, remove, modify and/or vary any elements of features and functionalities of the Website or the services.

Mondaq also reserves the right from time to time to monitor your Use of the Website and/or services.

Disclaimer

The Content is general information only. It is not intended to constitute legal advice or seek to be the complete and comprehensive statement of the law, nor is it intended to address your specific requirements or provide advice on which reliance should be placed. Mondaq and/or its Contributors and other suppliers make no representations about the suitability of the information contained in the Content for any purpose. All Content provided "as is" without warranty of any kind. Mondaq and/or its Contributors and other suppliers hereby exclude and disclaim all representations, warranties or guarantees with regard to the Content, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. To the maximum extent permitted by law, Mondaq expressly excludes all representations, warranties, obligations, and liabilities arising out of or in connection with all Content. In no event shall Mondaq and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use of the Content or performance of Mondaq’s Services.

General

Mondaq may alter or amend these Terms by amending them on the Website. By continuing to Use the Services and/or the Website after such amendment, you will be deemed to have accepted any amendment to these Terms.

These Terms shall be governed by and construed in accordance with the laws of England and Wales and you irrevocably submit to the exclusive jurisdiction of the courts of England and Wales to settle any dispute which may arise out of or in connection with these Terms. If you live outside the United Kingdom, English law shall apply only to the extent that English law shall not deprive you of any legal protection accorded in accordance with the law of the place where you are habitually resident ("Local Law"). In the event English law deprives you of any legal protection which is accorded to you under Local Law, then these terms shall be governed by Local Law and any dispute or claim arising out of or in connection with these Terms shall be subject to the non-exclusive jurisdiction of the courts where you are habitually resident.

You may print and keep a copy of these Terms, which form the entire agreement between you and Mondaq and supersede any other communications or advertising in respect of the Service and/or the Website.

No delay in exercising or non-exercise by you and/or Mondaq of any of its rights under or in connection with these Terms shall operate as a waiver or release of each of your or Mondaq’s right. Rather, any such waiver or release must be specifically granted in writing signed by the party granting it.

If any part of these Terms is held unenforceable, that part shall be enforced to the maximum extent permissible so as to give effect to the intent of the parties, and the Terms shall continue in full force and effect.

Mondaq shall not incur any liability to you on account of any loss or damage resulting from any delay or failure to perform all or any part of these Terms if such delay or failure is caused, in whole or in part, by events, occurrences, or causes beyond the control of Mondaq. Such events, occurrences or causes will include, without limitation, acts of God, strikes, lockouts, server and network failure, riots, acts of war, earthquakes, fire and explosions.

By clicking Register you state you have read and agree to our Terms and Conditions