FinSA – Deadlines for registration with a client advisory registry and affiliation with an ombudsman have been set
The Swiss Financial Market Authority FINMA has granted the first licenses to supervisory organisations that will be responsible for the oversight of portfolio managers and trustees.
In addition, as of 20 July 2020, BX Swiss AG has been authorised as registration body for client advisers by FINMA and, as of 24 June 2020, the first ombudsman’s offices have been approved. These approvals trigger the start of the six-month period for registering as a client adviser and for affiliating with an ombudsman’s office.
Portfolio managers and trustees
When the new financial market regulations in the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA) entered into force earlier this year, new prudential obligations were put in place for portfolio managers and trustees. Pursuant to the FinIA, portfolio managers and trustees require a license from FINMA. The supervision of portfolio managers and trustees in connection with adherence to financial market regulations is outsourced to supervisory organisations which also require a licence. As of 6 July 2020, FINMA has granted authorisations to Organisme de Surveillance des Instituts Financiers (OSIF) and to Organisation de Surveillance Financière (OSFIN) as supervisory organisations. Applications of other supervisory organisations are still pending.
Client advisers of financial service providers
Furthermore, under the FinSA, client advisers of financial service providers must register if they are not subject to supervision under Swiss financial market laws (like for instance financial advisers). Foreign financial service providers that are subject to prudential supervision in another country are exempted from the registration duty if they are prudentially supervised abroad and they provide services exclusively to professional and institutional clients in Switzerland. Registers are kept by registration bodies that need to be authorised by FINMA. As of 20 July 2020, FINMA authorised BX Swiss AG to act as such a registration body. This approval marks the start of the six-month period for registering as a client adviser. Until 19 January 2021, all client advisers must have submitted their application to be registered with one of these registration bodies. For the registration, client advisers will have to prove (i) sufficient knowledge of the FinSA code of conduct and the necessary expertise to conduct their activities, (ii) that they have taken out professional indemnity insurance or that equivalent collateral exists and (iii) that they or the financial service provider for which they work is affiliated with an ombudsman’s office. Even if the registration will not lead to prudential supervision of client advisers registered, it shall increase confidence of the market in client advisers.
Ombudsman's offices for financial service providers
The entry into force of FinSA has also led to the obligation for every financial service provider that offers its services to clients in Switzerland to join an ombudsman's office. Even if this obligation may prove to be less useful for services provided by client advisers to certain client groups such as institutional clients, the current text of the law requires all financial service providers to affiliate. These ombudsman's offices require the approval of the Federal Department of Finance. Within six months of the recognition of the first ombudsman's office, i.e. until 23 December 2020, financial service providers must affiliate with such an office which will be monitored by FINMA.
The purpose of the ombudsman’s offices shall be to serve as a first centre for dispute resolution between clients and financial service providers. Disputes shall be resolved, to the extent possible, in an informal and efficient way for instance by an impartial clarification of the legal situation. They shall be free of charge for the client. The parties will be able to file a mediation request with the ombudsman’s office, if certain conditions are met. Such a request will not rule out civil action or prevent such an action to be initiated. Should a conciliation authority, a court or court of arbitration, or an administrative authority initiate a process on the case, the ombudsman shall terminate proceedings.
Judith RaijmakersPartner Attorney at law
Judith Raijmakers, attorney at law, is a partner in our Zurich and Luxembourg offices. She focuses on finance transactions including acquisition financing, asset financing, real estate and transportation financing, debt (re)structuring and debt issuances.T: +41 43 434 67 24 M: +41 79 870 91 03 E: firstname.lastname@example.org
Diana LafitaAssociate Attorney at law
Diana Lafita, attorney at law, is a member of the Banking and Finance practice group in our Zurich office. She focuses on banking, insurance and capital markets regulatory and private matters.T: +41 43 434 67 49 M: +41 79 368 25 59 E: email@example.com
Stéphanie HagmannAssociate Attorney at law
Stephanie Hagmann, attorney at law, is an associate in our Zurich office. She focusses on finance transactions including acquisition financing, asset financing, debt (re)structuring and debt issuances. Furthermore, she is focusing on corporate law and M&A transactions.T: +41 43 434 67 38 M: +41 79 890 10 11 E: Stephanie.Hagmann@loyensloeff.com