Switzerland’s Financial Services Act (FinSA) aims at:
All financial service providers (whether under prudential supervision or not) must apply FinSA as of 1 January 2020, with a maximum 2-year transition period for certain aspects.
FinSA applies in Switzerland to all professional financial service providers, including banks, and issuers of financial instruments.
Financial services include for example:
FinSA stipulates that clients must be classified in one of the three following categories:
Private Clients are clients who are neither Professional Clients, nor Institutional Clients (see definitions below).
They are given the highest protection, which means higher extensive information and explanations, but limited access to certain financial instruments and services.
Professional clients are deemed to possess sufficient knowledge and experience to take investment decisions in full knowledge of the nature and extent of the associated risks, and be able to bear the financial consequences of those decisions.
They are afforded limited protection.
Among Professional Clients are large companies or companies with professional treasury operations.
Institutional clients are deemed to possess knowledge and experience comparable to that of financial services providers.
According to FinSA, the legal rules of conduct, particularly the duty of information by financial intermediaries, are not applicable to these clients.
Institutional Clients include banks, insurance companies and other financial intermediaries subject to prudential supervision in Switzerland or abroad.
Under FinSA clients are entitled to change categories upon written request, provided they meet the conditions.
High net worth clients or private investment structures created for high net worth clients without professional treasury operations may request to be treated as Professional Clients if:
These amounts do not include assets such as real estate, social security claims or pension fund assets
FinSA includes the following conduct rules:
The duty to provide information encompasses factual data relating to the financial service provider as well as information on the financial services it offers.
The financial service provider must inform its clients on:
In addition, the financial service provider must inform its clients on:
Private Clients are provided with a key information document (KID) for each FinSA-covered financial instrument recommended to them personally. Each KID contains information on the characteristics, risks and costs of a given financial instrument, allowing easier comparison between financial instruments.
Financial service providers must document the financial services agreed with clients and the information collected about them.
They shall also document the client’s needs and the grounds for each recommendation.
Financial service providers shall ensure best execution of their client’s orders, i.e. that the best possible outcome is achieved in terms of cost, timing and quality
These code of conduct rules do not apply for Institutional Clients.