FAQ
Summary FAQ
FinSA FinIA
FinIA is the Swiss Federal Act on Financial Institutions, which sets out the licensing requirements for companies in the financial sector in Switzerland. It applies in particular to independent asset managers and trustees. It mainly contains organisational and capitalisation provisions.
FinSA is the Swiss Federal Act on Financial Services, which precisely defines the professional rules between financial services providers and their clients. It applies in particular to independent asset managers. It is not applicable to the activity of the trustee, if the trustee is confined to his regular activity without the provision of financial services.
The financial institution must have a share capital of at least CHF 100,000 and its total equity (share capital and other funds assimilated to equity) must amount to at least one quarter of its annual operating budget.
Such insurance is not legally required. It should be noted that if it exists, it can be partially deducted from the amount of equity capital required.
However, OSIF recommends that financial institutions take out such insurance.
The Financial Services Act, which applies to independent asset managers and not to trustees, lays down a number of principles which, for the most part, already correspond to good professional practice:
- customer profile,
- “appropriateness” and “suitability” of the services and products provided to customers,
- duty to provide information,
- accountability,
- transparency regarding commissions received from third parties,
- avoidance of conflicts of interest,
- adequate organisation,
- business continuity management,
- guarantee of irreproachable management by everyone in the organisation,
- selection and adequate supervision of the delegatees,
- audit of financial statements, etc.
These various points will be subject to prudential supervision in the same way as the anti-money laundering rules.
OSIF
OSIF is an association under Swiss law created on the initiative of ARIF (Association Romande des Intermédiaires Financiers). It is of public interest and non-profit making.
On 6 July 2020, it was approved by FINMA as a supervisory body in accordance with the FINMA ordinance.
They are high-level professionals from the financial field, professionals in asset management, the trust industry, banking or financial services law. They are required to be independent of the institutions subject to the supervisory body. The bodies of OSIF have been approved by FINMA.
No, FINMA is opposed to it. Membership of a supervisory body is effected by means of a supervisory agreement between the financial institution and OSIF, which defines rights and obligations.
No. OSIF may not impose financial penalties or withdraw the licence to practise. Such measures are the exclusive responsibility of FINMA.
No. Supervisory decisions are not subject to appeal. A financial institution that refuses to comply is reported to FINMA, which decides on the measures to be taken.
OSIF is a supervisory body that monitors the compliance of reporting institutions with financial market laws (in particular with the FINMA, the FinSA and the AMLA). It has the power to impose any appropriate supervisory measures. It also has the function of reporting immediately to FINMA on any difficulties encountered in the performance of its duties and of drawing up supervisory reports in accordance with the forms and requirements of FINMA.
OSIF has been working for several years on obtaining the accreditation, in permanent contact with FINMA. It relied on ARIF’s staff and facilities for its start-up in order to minimise its costs. It was one of the first to file a complete and satisfactory application to FINMA, and was therefore one of the first to be approved.
OSIF is a supervisory body based mainly in French-speaking Switzerland. It therefore maintains a close relationship with the financial institutions in this region in terms of proximity, language and knowledge of the market. The OSIF was created on the existing basis of the Association Romande des Intermédiaires Financiers. This association enjoys the respect of the authorities and the loyalty of its members who know that it offers an excellent service. OSIF benefits from the facilities and financial support of ARIF, enabling it to minimise its costs.
It isn’t. This is expressly prohibited by law and FINMA’s guidelines. In practical terms, all OSIF bodies have justified their complete independence from the financial institutions subject to supervision. Most of the individuals on its strategic board of directors are independent; those comprising its operational management are fully independent. OSIF is not dependent on any professional or political organisation, and does not depend on any external financial support, except that of ARIF upon its creation.
This is correct considering that ARIF’s financial reserves are made up of its members’ subscriptions and the remuneration of its services. However, these members are for more than half of the financial institutions, independent asset managers or trustees, who are now subject to the supervisory body, and will therefore migrate to it.
OSIF’s offices are located at the same address as ARIF’s, on the floor above, in independent premises.
AUDITORS
The prudential audit is the audit that the supervisory body, or an auditor approved by it, will carry out to verify that the financial institution meets the conditions laid down in FinIA, and FinSA where applicable. Depending on the case, its frequency will be from one to four years, after a probationary period of two years. It will also include MLA aspects and financial statements. This rule applies to all supervisory bodies and none of them will be able to grant pluriennalisation without going through this probationary period. Furthermore, pluriennalisation will depend on the risk categories of each financial institution according to the scales imposed by FINMA.
The auditors, and those responsible for auditing, must be approved by the supervisory body. This approval is granted to audit firms which so request under the conditions laid down by law, particularly in terms of competence, continuous training, independence and the guarantee of irreproachable management.
The auditor is appointed at its own expense by the financial institution which has chosen him from among those approved. It will also be possible for the supervisory body to appoint an auditor, at the member’s expense, for specific controls.
Your statutory auditor can function as a prudential auditor if he is approved. It will also be possible for you to retain your statutory auditor even if he does not carry out the prudential audit; however, this will result in additional costs, as the financial statements will also have to be audited during the prudential audit.
The cost of the prudential audit can be freely negotiated between the financial institution and its auditor. It will depend on the importance of the work to be carried out, in relation to the size of the company, its activities and its clientele. No fee is imposed by the supervisory body.
MEDIATION
A mediation body is a private office dedicated to attempting out-of-court mediation in the event of a dispute between a financial institution and one of its clients.
It is required by law.
There will be an annual membership fee, and a fee in the event of recourse to the mediation body, which will have to be paid by the financial institution.
To date, eight mediation bodies have been accredited, a list of which can be found on the portal of the Federal Department of Finance.
According to FINMA’s latest communications, financial institutions have until 31 January 2021.
No. Mediation bodies must be fully independent.
No. Financial institutions are free to choose their mediation body from among those accredited.
TRUSTEES
OSIF is created by ARIF, Association Romande des Intermédiaires Financiers. The latter has a large number of trustees among its members, whom it has supported for more than 20 years. ARIF has an excellent knowledge of this industry. It is moreover the only SRO to have published a specialised MLA directive for trusts and other similar entities. ARIF and OSIF work fluently in English. OSIF is therefore a good choice for trustees.
TRAINING
All academic education (universities, federal diplomas, equivalent foreign diplomas), as well as Swiss or foreign certificates of competence in the field of financial services, respectively in the field of trusts, can be considered. A case-by-case examination will also be carried out and will depend on the adequacy of the training followed and the financial services actually offered by the institution.
According to Article 25 FinIO, the training relevant to the activity actually carried out must be at least 40 hours.
This basic training must be maintained by continuous training.
The required experience is in principle and according to the FinIA of at least five years in the field of asset management, respectively in the field of trusts. This experience will be weighed, in particular to determine whether it is commensurate with the financial services actually offered by the financial institution.
These are the persons involved in the management of the financial institution. At least two of these persons must have these qualities of training and experience. In special cases, in particular very small structures, at least one person must have this quality.
No. This power is denied by the Ordinance on Supervisory Bodies.
Financial institutions and their staff will be free to choose from the many training opportunities available on the market. These include in particular the training offered by the Institut Supérieur de Formation Bancaire (ISFB), which provides all the training required for CWMA certification, and which is accredited to organise certification examinations (even if the training has been taken elsewhere).
ARIF will continue to provide training in MLA matters and, during the transitional period, will organise information sessions on the other regulatory requirements (FinIA, FinIO, FinSA, FinSO in particular).
L’ARIF continuera à fournir une formation en matière LBA et organise pendant la période transitoire des séances d’information sur les autres exigences réglementaires (LEFin, OEFin, LSFin, OSFin notamment).
The CWMA (Certified Wealth Management Adviser) training is a training and certification programme created in Switzerland by a standard-setting body accredited by SECO (Federal Department of Economic Affairs), known as SAQ. This programme comprises on-demand training modules, defined after a prior positioning test of the candidate, followed by a certification examination.
CWMA certification also provides for continuing education. This is the training and certification model that has been adopted by the majority of banks in Switzerland for their own staff.
No, it is a recommendation. On the other hand, this certification will in any case be considered sufficient by OSIF.
The CWMA training is currently the “standard” in the Swiss banking industry for professionals working in banks. Considering that many independent asset managers come from banks, many of them have already completed this training. Until now, CWMA certification has been reserved exclusively for bank staff. OSIF has obtained from the SAQ that it will open up this certification to independent asset managers, so that they can demonstrate the same level of training as their fellow bank employees. ARIF and OSIF believe that the banks’ prudential approach towards external managers will eventually lead to the requirement from them of a training equivalent to that of their own employees.
A complete CWMA training course, spread over one year, costs around CHF 6,000. However, most professionals do not need to follow this full course and will have the option of participating only in those modules that appear necessary for their training after a placement test (mock examination).
The training required, together with experience, depends on the type of financial services offered. A good way to test one’s wealth management skills is to take the CWMA Positioning Examination organised by the ISFB.
MLA training for financial institutions will be integrated into the OSIF requirements. It will continue to be provided by ARIF, as at present.
FINMA LICENCE
For asset managers and trustees in existence on 31 December 2019, the deadline for submitting an application for authorisation to FINMA is 31 December 2022. However, the application for authorisation can only be submitted once the supervisory authority has been granted approval.
After the application for authorisation has been submitted to FINMA, financial institutions may continue to operate until FINMA has issued its decision.
A financial institution commencing business during 2020 must submit its application for authorisation to FINMA within one year of the first supervisory authority’s approval, i.e. by 6 July 2021 at the latest. It may continue to operate until FINMA has issued its decision.
These financial institutions will only be able to commence business after receiving a licence to operate from FINMA.
Yes, this information and documents can be used by OSIF if they are up to date, which will facilitate the tax liability. Some of them will have to be renewed, such as extracts from criminal records or CVs of persons who have been employed for a long time.
Yes, OSIF will inform reporting entities on the preparation of their application, which will in principle be the same for OSIF membership as for the required FINMA authorisation.
ARIF will continue its task as a self-regulating body for financial intermediaries not subject to the FinIA.
FINMA’s supervision of the DSFIs ceased on 31 December 2019. DSFIs not subject to FINMA must join an SRO by 31 December 2020. DSFIs that are financial institutions subject to FINMA will have to affiliate with an SRO or apply for SRO supervision by December 31, 2020.
In the current state of the law, yes. However, the precious metals testers have obtained from the Federal Department of Finance that a draft amendment to the FinIA be submitted to parliament, so that they will be subject to the sole control of the Federal Precious Metals Control Office. However, parliamentary work has not yet been completed, so this solution does not yet have the force of law. In the meantime, precious metal assessors must at least join an SRO in order to fully comply with the legal requirements in force, which are likely to change before the deadline of 31 December 2022. If this is not the case, the assessors will have to become subject to a supervisory body.
REGISTER OF ADVISERS
The register of client advisers lists all individuals providing financial services without being employed by an authorised financial institution within the meaning of FinIA and subject to prudential supervision. This applies in particular to pure investment advisers, fund distributors and service providers operating from abroad. Registration requires the provision of substantially the same information as for the staff of financial institutions.
ARIF has already obtained its approval to exercise the function of register of advisers.
The legal provisions stipulate a minimum cost of CHF 500 for registration. Due to its pre-existing structure, ARIF is in a position to offer this tariff.
There is no provision for prudential supervision of advisers subject to registration, but only for a renewal of registration every two years and the announcement of changes to the registered data.
Please do not hesitate to send us all your questions, large or small, and we will gladly answer them and include those of general interest in this list.