FinIA – New regulation for Trustees

In force since January 1, 2020, the Financial Institutions Act (FinIA) and its relevant execution ordinance (FinIO) sets out the authorisation conditions and organisational requirements for financial institutions subject to prudential supervision. The new regulatory framework also includes the Financial Services Act (FinSA) and the related ordinance.

For the first time, the Trustees fall within the scope of the prudential supervision in the same way as other financial services providers who carry out, in whatever form, the activity of asset management.

Prior to engage in business operations and activities, it is required to obtain an authorisation issued by the Swiss Financial Market Supervisory Authority (FINMA) and subject to stringent requirements in relation to:

  1. the minimum capitalization;
  2. existence of adequate guarantees or existence of adequate insurance coverage on professional liability;
  3. presence of adequate own funds;
  4. annual auditing;
  5. professional skills possessed by their employees, in terms of adequate training and sufficient accumulated experience;
  6. adequate risk management and effective internal control entrusted to subjects not involved in supervised activities.

Ongoing prudential supervision of Trustees – as well as of individual client’s portfolio managers – is performed by one or more supervisory organization accredited by FINMA.

Capital Trustees meets the requirements of the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA) and has adopted a series of measures in line with the new standards.

On 15 June 2018 Parliament adopted the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA).

FinIA standardises the authorisation rules for certain financial institutions. The introduction of FinIA will see independent managers of individual client portfolios (“portfolio managers”, “PMs”), trustees and some trade assayers, as defined in the Precious Metals Control Act (PMCA), become subject to supervision. Moreover, managers of the assets of occupational pension schemes, who were previously supervised by the Occupational Pension Supervisory Commission (OPSC), will now be subject to supervision by FINMA.

FinSA contains code of conduct provisions with which financial service providers must comply vis-à-vis their clients. The Act contains code of conduct provisions with which financial service providers must comply vis-à-vis their clients. It also makes provision for prospectus duties and requires an easily understandable key information document for financial instruments. With the introduction of FinSA, FINMA will also approve the registration body which manages the register of advisers, as defined in FinSA, and the reviewing body for prospectuses.

FINMA authorises these financial institutions and is responsible for enforcement. Ongoing supervision of PMs, trustees and trade assayers will be performed by one or more supervisory organisations (SO) authorised and supervised by FINMA. In the context of supervising these institutions, the SO will also take on responsibility for supervising compliance with AMLA rules, a responsibility which previously rested with the self-regulatory organisations (SROs) as defined in the Anti-Money Laundering Act.

On 24 October 2018 the Swiss Federal Council has also published the following three consultation drafts for three ordinances, containing the implementing provisions relating to FinSA and FinIA:

The Financial Institutions Ordinance (FinIO) fleshes out the authorisation conditions and duties for financial institutions and their supervision.

The Financial Services Ordinance (FinSO) fleshes out financial service providers’ duties to provide advice and information and contains provisions on their organisation, the new register of client advisers, client documentation and ombudsman services.

Finally, the Supervisory Organisation Ordinance (SOO) governs the authorisation conditions and activities for the newly introduced supervisory organisations (SO). According to the FinIA, these will be responsible for the ongoing supervision of portfolio managers, trustees and trade assayers in accordance with the Precious Metals Control Act. In the process, the supervisory organisations are to apply a concept graded according to risk.

The FinSA will enter into force at the same time as FinIA. According to the Federal Department of Finance FDF, both laws are expected to come into force with the implementing ordinances on 1 January 2020.