FINMA Approves First Supervisory Organizations

The Swiss Financial Market Supervisory Authority FINMA has countenanced OSIF and OSFIN the first licenses as supervisory organizations which have responsibility for inspection of asset managers and trustees. In addition, it has also sanctioned the first legal body for the client consultancy. This step complements broader investor protection efforts, as outlined in FINMA’s initiatives like FINMA helps investors, aimed at ensuring market integrity and transparency. Moreover, the Federal Department of Finance has accepted the first ombudsman's office for providing financial services.

Commencing with 6^th July, according to the FINMA's grant, the Organisme de Surveillance des Instituts Financiers (OSIF) and the Organisation de Surveillance Financière (OSFIN) has become the status of supervision organizations (SOs). OSIF and OSFIN have made their application in January 2020. The aim of these supervision organizations will be to inspect the portfolio managers and trustees. Their role integrates into the broader supervisory landscape, also shaped by evolving frameworks such as the Financial market roadmap, which outlines Switzerland’s strategic priorities in finance. At the moment there are three other SO applications, which will be reviewed by FINMA.

After an enactment of the Financial Institutions Act (FinIA) and the Financial Services Act (FinSA) the regulation of portfolio managers and trustees have changed. The independent portfolio managers and trustees must also have FINMA license. At the same time, they will be controlled by SOs in accordance with liabilities confirmed by FinlA and FinSA as well as compliance with AMLA laws. In the case of any violation FINMA will provide the observance of the financial market law. Such enforcement powers are consistent with FINMA’s broader oversight practices, including interventions in areas like FINMA crowdfunding factsheet, where licensing clarity is essential.

To receive a license the portfolio managers and trustees have to make an application from FINMA till the end of 2022 and to furnish with the proofs of their affiliation to SO. They had to make to register at FINMA till the 30^th of June. And by this date FINMA received the requests from 1934 portfolio managers and 271 trustees who are eager to get the license. Moreover 273 portfolio managers have admitted that they plan to apply for a license this year. 629 portfolio managers have announced their applications for the next year and 1,304 for 2022.

From 20 July, BX Swiss AG was entitled by FINMA as the first registration body for customers advising. The approval of further registration bodies is expected to be. The registration bodies keep a register of advisers. Client advisers of finance service providing, which have no supervision subject and offer their services in Switzerland, must be registered there. It will be also examined if the client advisers got all the necessary training. This is in line with regulatory shifts and governance structures, as seen during FINMA board changes, which reflect evolving supervisory expectations. It should be emphasized that FINMA is responsible for an authorization, not for a prudential inspection of these registration authorities.

The Federal Department of Finance (FDF) confirmed the first ombudsman's offices according to the FinSA effective as of June 24, 2020. As contrasted with the previous self-regulated ombudsman's system for the banks, according to the FinSA it is now obligatory to affiliate to the ombudsman's office for all the financial service providers are working in Switzerland. Moreover, the ombudsman's office needs authorization from the FDF. AS before, the ombudsman's offices have to solve the disputes between clients and financial services providers during the conciliation procedure. According to the FinSA, the providers of the finance services must be obligatory affiliated to one of the ombudsman's offices not later than in six months after such an office had been recognized. Such obligations resonate with global compliance expectations, including those emphasized in the latest FATF updated statements regarding financial transparency and enforcement consistency.