LEFin/LSFin: genuine legal recognition of the profession

The United Federal Assembly adopted the Financial Services Act (LSFin) and the Financial Institutions Act (LEFin) in the final vote on 15 June 2018. These two laws aim at creating a level playing field, enhancing the financial centre’s competitiveness and improving clients protection.
Following the consultation on the provisions of the implementing ordinances (published as a draft at the end of October 2018), the two new laws entered into force on 1 January 2020.

WHO IS CONCERNED? (ART.2 LEFIN)

ASSET MANAGERS

TRUSTEES

PRECIOUS METAL TESTERS

LSFIN: WHAT IS IT ?

The LSFin defines – for all financial service providers – rules for the provision of both these services and financial instruments, and in addition makes it easier for clients to exercise their rights. The core of these provisions contains in particular the obligations to inform clients and to collect information about them, as well as uniform prospectus requirements for all transferable securities offered for sale to the public or traded on a trading platform. The LSFin also requires financial service providers to draw up concise documentation for financial instruments offered to private clients. Finally, it makes provision for recourse to be had to mediation bodies.

LEFIN: WHAT IS IT ?

LEFin will introduce differentiated supervisory rules for financial institutions (wealth managers and trustees, collective-wealth managers, fund managements and securities houses). The main novelty is that the managers who manage assets on behalf of individual clients or pension institutions, as well as the trustees, will be subject to licensing by the Swiss Financial Market Supervisory Authority (FINMA). The latter will rely an approved supervisory body.  

The LEFin also contains the legal basis for creating a new licensing category for Fintech companies. The latter will benefit from less stringent licensing and operating conditions than for the current banking license.  

CODE OF CONDUCT FOR THE PROVISION OF FINANCIAL SERVICES:

Client classification
Obligation to inform
In-service training and further training
Verification of the appropriateness of products and the adequacy of management with regard to the clients’ situation
Obligation to draw up documents and report
Remuneration: transparency and information
Organizational measures: organizational structure and adequate internal guidelines
Acknowledged competency and professional qualifications