Newsletter 358 of 11 November 2015 Draft FIDLEG FINIG
Dear Sir or Madam,
Last week, the Federal Department of Finance (FDF) has published the latest drafts of the Financial Services Act (FIDLEG) and the Financial Institutes Act (FINIG) as adopted by the Federal Council. The revised drafts come more agreeable than the first versions. The Federal Council has refrained from topics such as clean-money regulations, the revision of the rules regarding the burden of proof and the arbitration tribunal, and client benefiting legal cost regulations have been defused. However, should FIDLEG and FINIG come into force in their current versions, the Swiss external asset management sector will bring substantial new rules regarding strengthened client rights, professional duties and organizational rules. Furthermore, the affiliation with an ombudsman’s office will become mandatory. The revised draft of FINIG will also impact the external asset managers and the trustees in Switzerland and will require that these are comprehensively licensed and regulated.
We of VQF believe that these legislative projects will also come at a much higher price that will ultimately be paid by the clients. Especially less wealthy investors that are intended to be protected by FIDLEG will face certain difficulties when searching for a suitable external asset manager. Therefore we are convinced that a strengthening of the existing rules would not only have been easier and much cheaper, but also more beneficial to financial services clients.
One of the most essential modifications furthermore impact the supervisory system in the para-banking sector: So far, self-regulatory organizations and industry organizations have been responsible to supervise most external asset managers in Switzerland. Under FINIG, the “Supervisory Organization” would be the only competent body to supervise external asset managers and trustees. FINIG would also permit that several supervisory organizations share the supervisory duty regarding asset managers and trustees. The new supervisory organization or organizations would be licensed and supervised directly by FINMA regarding the organization and the supervisory duty.
If approved by the Parliament , we assume that the two regulations come into force by 1 January 2018.
While external asset managers and trustees face several changes, other SRO members are not affected by these regulatory projects. VQF will again inform you on all relevant developments in this regard. However, we do not see any need for hectic decision making. Due to the new alignment of political powers in Parliament and due to the upcoming elections of the Federal Council we deem the chances of this regulatory project for unchanged approval in Parliament even more vague at this point in time. There will be enough time to make well informed and well-reasoned decisions after the political process.
Kind regards,
VQF
Financial Services Standards Association
Please note that only the German version is legally binding.