FinSA: First result of treatment by Economic Commission of the Swiss National Council

in Financial Services, 01.03.2017

The Economic Commission of the Swiss National Council started discussing the FinSA at the end of January 2017 and continued its work on the legal draft on 21/22 February 2017. So far, the Commission has treated the first 10 articles of the act. However the controversial question whether insurance companies should remain in the scope of the FinSA or not has been delayed for the time being.

Nonetheless, decisions have been taken in some key-areas:

  • Scope of application: Article 3 FinSA will be expanded with a definition of the legal term “commercial nature” in order to prevent advice being given within a circle of acquaintances to fall into the scope of the law. The Commission accepted this decision unanimously.
  • Client categorization criteria: The Commission suggested changing the third of the three criteria for a company to classify as professional client from number of employees to equity capital. With this change a further harmonization with the criteria applied by MiFID II would be reached and hence potential procedural inefficiencies could be avoided for Swiss financial intermediaries implementing the two regulations in parallel. Furthermore, the Commission suggested reinserting the competence of the Swiss Federal Assembly to define further client categories as professional. This authority of the Federal Assembly had been removed from the dispatch draft by the Council of States in December 2016. Finally, for all companies with a professional treasury an opting-out option to institutional shall be created.
  • Requirements regarding education: The duty of the industry organizations to set minimum requirements regarding the education of client advisors, which the Council of States had removed from the Federal Assembly’s dispatch draft, has been reinserted by the Commission. The National Council shall furthermore have the right to declare these minimum standards as binding.
  • Information duties: Finally, the Commission requested to remove the duty to inform the client promptly or at the next client visit (depending on the nature of the change) of relevant changes, such as a change in the risk structure of a financial service offered. This is a significant alleviation in the area of the new information duties.

A large majority of the Commission rejected two petitions aimed at requiring companies to adopt a sustainable business culture as well as social and ecological responsibility.

Time plan and recommended next steps

The Economic Commission of the Swiss National Council will restart its work on the FinSA on April 3/4 2017. We recommend that Swiss banks and external asset manager closely follow the results of these discussions and begin analyzing the impact of the FinSA and FinIA on their business models if they have not done so already. Key questions that should be covered in such an analysis should include:

  • Will an additional license be required?
  • How will the new rules impact the core processes along the value chain?
  • What is the need for action caused by these changes?
  • Which are the key strategic decisions to be taken?
  • How should the actual implementation be set up?
  • Shall MiFID II rules be implemented additionally and if so, how shall those two implementation projects be coordinated?

Performing a regulatory impact assessment is a good way to address all of these questions.



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