Offering Financial Services and Marketing Foreign Collective Investment Schemes in Switzerland – Update on the New Financial Services Act

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The Federal Department of Finance issued a statement yesterday clarifying certain issues regarding the new draft ordinances to the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA).

The Federal Department of Finance issued a statement informing that the Federal Council is expected to approve at the beginning of November 2019 the final versions of the Financial Services Ordinance and of the Financial Institutions Ordinance implementing the FinSA and the FinIA.

Both acts and the implementing ordinances should enter into force on 1 January 2020.

In order to provide the market with preliminary information, the Federal Department of Finance has set out the main points on which the draft ordinances are to be amended. The main takeaways regarding the draft Financial Services Ordinance are:

  • Foreign financial advisors of prudentially supervised institutions will not need to be registered in a newly created financial advisor register to carry out their activities in Switzerland on a cross-border basis provided that they target professional and institutional investors.
  • There will be a transitional period of two years for the implementation of the classification of clients, the code of conduct, the knowledge and organisational requirements and the key information documents (instead of one year as initially planned).

Regarding the concept of financial services in the context of fund marketing, the communication does not substantially clarify the situation. The draft Financial Services Ordinance currently provides that any activity, such as intermediation, which aims specifically at the purchase or sale of financial instruments is considered a financial service. The statement provides that the term “intermediation” will be removed from the definition so that the term financial service be “not too broad but not too narrow“. It further mentions exemptions in connection with corporate finance services and the sale and purchase of companies.

Further changes will be made to the information and verification requirements.

The Financial Services Ordinance, the Financial Institutions Ordinance and the Supervisory Organisation Ordinance contain the implementation provisions of the Federal Council. They were subject to a consultation procedure from 24 October 2018 to 6 February 2019.

The draft Financial Services Ordinance had triggered discussions in the market around important requirements which were considered to be unclear or overreaching. Yesterday’s statement published by the Federal Department of Finance could have better clarified the concept of financial services, which is important as it is the basis of a cascade of requirements. However, the decision to exempt foreign financial advisors subject to a prudential supervision from registering with the financial advisor register reflects the market’s views and is very good news.

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