Category Archives: FinSA (FIDLEG)

Key Investor Document – the flexible brother of the EU PRIIPs KID

On 15 June 2018, the Swiss parliament adopted the Financial Services Act and the Financial Institutions Act, which are expected to enter into force on 1 January 2020. One of the key changes introduced by the Swiss Financial Services Act is the obligation to prepare and make available to retail investors a short document setting out the key information, the so-called key information document (Basisinformationsblatt). The draft implementing ordinances the Federal Council has published on 24 October 2018 contains supplementary provisions on the content, language, layout and scope of the new regulatory leaflet. While the proposed template for the future key information document is almost identical to the EU PRIIPs KID template, the Swiss version of the key information document is far more flexible than its EU equivalent and reflects the pragmatic approach taken by the Federal Council in the draft ordinances to ensure a successful implementation of the new regulatory leaflet.

By Daniel Haeberli (Reference: CapLaw-2018-59)

The Enforcement of Clients’ Rights in the Financial Services Act

The new Financial Services Act will require all providers of financial services to be affiliated with an ombuds institution. This requirement is the only substantially new element remaining from a broad set of proposals to strengthen the enforcement of clients’ rights. Parliament ultimately opposed the introduction of new procedural mechanisms specifically for the financial services industry, such as collective action instruments and changes to the ‘loser pays’ rule.

By Thomas Werlen / Jonas Hertner (Reference: CapLaw-2018-60)

FinSA: New Registration Duty for Client Advisers

The Financial Services Act (FinSA), which is expected to enter into force on 1 January 2020, will introduce a new registration duty for client advisers of Swiss financial service providers not subject to prudential regulation and client advisers of foreign financial institutions. Today, no such registration requirement exists with the exception of similar obligations for untied insurance intermediaries, who have to register with the public register kept by the Swiss Financial Market Supervisory Authority (FINMA).

Under the new regime, client advisers will be required to register in a register maintained by one or more registration bodies licensed by FINMA. To register, they must evidence sufficient knowledge of the rules of conduct under the FinSA and the necessary expertise to perform their duties, adequate financial means as well as affiliate themselves to an ombudsman’s office. Clients may check the register at any time to verify that their adviser has the required qualifications. The registration will, however, not imply any prudential or ongoing supervision by FINMA. If a client adviser no longer meets the registration requirements, the adviser will be deleted from the register by the competent registration body and may, consequently, no longer engage in activities as a client adviser.

By Martin Peyer (Reference: CapLaw-2018-61)

FinSA Business Conduct Rules and MiFID II

The following article deals with the differences between the rules of conduct under MiFID II and FinSA. In the first part, the initial situation is described. Subsequently, the individual differences are discussed in more detail. The main differences in regulation can be found in the areas of client segmentation, definition of the service types, appropriateness and suitability test and dealing with retrocessions.

By Peter Sester / Dario Sutter (Reference: CapLaw-2018-62)

Funds Distribution under FinSA/FinIA: A change of paradigm

The introduction of the concept of an “offer” according to Art. 3 let. g FinSA as a replacement of the current notion of a “distribution” pursuant to Art. 3 CISA will lead to a number of consequences for the Swiss financial industry as well as for foreign financial services providers acting on a cross-border basis into Switzerland. The new concept is more flexible as the current notion of a “distribution”, but also raises a number of delicate questions which need to be clarified. The object of this article is to provide a first analysis of the salient features and challenges of the current and future regimes and their practical consequences with a specific focus on the placement of collective investment schemes in Switzerland.

By Diana Imbach / François Rayroux (Reference: CapLaw-2018-64)

The Proposed New Swiss Prospectus Regime – An Interim Report

In December 2016, the Swiss Council of States as the first chamber of Swiss parliament discussed the proposed Financial Services Act. If enacted as currently drafted, the act will impose new requirements on financial services providers and introduce a new Swiss prospectus regime. Modeled largely after the EU prospectus framework, the new prospectus regime will be a veritable paradigm change to Swiss capital market regulation, introducing a number of novelties for issuers of securities in the Swiss market, such as the requirement for an ex ante approval for most financial instruments, coupled with some important long-awaited explicit exemptions from such requirement and the requirement for a prospectus for secondary public offerings. Compared to the draft proposed by the Swiss Federal Council, the Swiss Council of States made a few well-received amendments, but some important issues still remain that would warrant reconsideration.

By Christian Rehm / René Bösch (Reference: CapLaw-2017-01)

FinTech Regulation (2.0): An Overview on the Proposed Three Element Solution

More regulation and digitization are two important trends that are currently reshaping the financial industry in Switzerland. In this context, the Swiss Federal Council has proposed the creation of a specific new FinTech regulation that shall be particularly relevant for business models in the overlapping areas of these two topics and has mandated the Federal Department of Finance (FDF) to develop a consultation draft that further specifies the “Three Element Approach” of the Swiss Federal Council. On 1 February 2017, the FDF published its related Explanatory Report on the Amendment of the BA and BO (FinTech). This article contains a short overview of the key parameters of the proposed new Swiss FinTech regulation and a first view on the Explanatory Report.

By Luca Bianchi (Reference: CapLaw-2017-02)

Liberalization of the Point of Sale– Amendments to the FIDLEG Bill’s Point of Sale Duties Proposed by the Council of States

After having been discussed throughout 2016 in various sessions of the Economic Affairs and Taxation Committee of the Swiss Federal Council of States (WAK-S), on 14 December 2016 the new Federal Financial Services Act (Finanzdienstleistungsgesetz; FIDLEG) was finally resolved on by the Federal Council of States (SR). Compared to the bill of the Federal Council (the Swiss government), the SR resolved on a number of amendments that will, in certain areas, substantially liberalize the proposed regulatory regime to be complied with at the point of sale. Starting this year, the bill is now before the other chamber of Swiss parliament, the Swiss National Council (NR), and it will be interesting to see to what degree the NR will follow the SR’s approach. The enactment of the bill is still anticipated at the earliest in 2018. The present article focuses on important amendments to the FIDLEG bill as suggested by the SR.

By Sandro Abegglen / Luca Bianchi / Edi Bollinger (Reference: CapLaw-2017-03)

Update on the Key Information Document Requirement

In CapLaw-2016-5, Enrico Friz outlined in detail the new duty of manufacturers of financial instruments to produce a key information document (KID, Basisinformationsblatt) for all financial instruments. This duty shall be implemented by the Financial Services Act (FinSA) which will likely be set into force during the course of 2018 and is currently being debated in the Swiss Parliament. The Council of States has, with rather minor amendments, approved the draft FinSA produced by the Federal Council in December 2016. The National Council will discuss the FinSA in one of its upcoming sessions. This contribution summarizes the changes to the FinSA in respect to the KID proposed by the Council of States compared to the Federal Council’s draft FinSA outlined in CapLaw-2016-5.

By Thomas Müller (Reference: CapLaw-2017-04)

The Enforcement of Clients’ Rights in the Draft Financial Services Act (FinSA) – Update

By Thomas Werlen / Matthias Portmann / Jonas Hertner (Reference: CapLaw-2017-05)

This article is an update of CapLaw-2016-4 in which the Dispatch on the draft Financial Services Act (FinSA) was discussed with a focus on Title 5 aimed to facilitate the enforcement of the rights of clients vis-à-vis Financial Services Providers (FSP). On 4 November 2015, the Swiss Federal Council adopted the Dispatch on the draft FinSA, sending it to parliament for consideration. With regard to the enforcement of rights, the draft proposed three elements: (1) a stricter disclosure obligation of FSP to provide documentation to clients, (2) an obligation of FSP to become affiliated with a certified ombuds body, and (3) new rules governing the allocation of costs in financial market litigation. In comparison with the original bill proposed by the Federal Council, the proposed provisions on the enforcement of rights in the draft FinSA were significantly curtailed after an overwhelmingly negative response from the financial services industry in the consultation proceeding. On 14 December 2016 the draft FinSA was discussed in the Council of States. The Council of States largely followed the draft as proposed by the Federal Council. Most recently, on 25 January 2017, the National Council’s Economic Affairs and Taxation Committee has entered into the debate on the draft FinSA. The Committee will discuss the draft in detail at its meeting on 20/21 February 2017. This will be followed by a debate in the National Council which will likely take place in Spring 2017. The proposed changes by the Council of States related to the enforcement of clients’ rights are discussed below.