• Probus Group

FinIA & FinSA January 1st 2020

On January 1st 2020 new Swiss legal provisions, the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), will come into force and will affect the asset and fund management sectors. These new laws will have significant implications for Independent Asset Manager who be required to adapt their business models accordingly.


The laws aim to create uniform competitive conditions for financial intermediaries and improve client protection. Namely to subject the sector of Independent Asset Managers to the same prudential supervisory standards as their Swiss financial industry peers. They also provide this sector of the industry with a form of accreditation enhancing its status.


FinIA mainly concerns the internal organization of the company and will require asset managers to, at a minimum, have an adequate business framework: qualified directorship (introduction of minimum criteria in terms of experience and ongoing training), with compliance, risk and internal control functions (varying depending upon the size of the business model); minimum capital and solvency requirements; and FINMA (Swiss Financial Market Supervisory Authority) licensing and prudential supervision for all asset managers and trustees. Some companies will be directly supervised by FINMA, whereas others will adhere to a supervisory organisation that is independent in its activity, however will be authorised to operate by FINMA.


The purpose of FinSA is mainly aimed at customer protection. The law contains code of conduct provisions and a distinction will be introduced to differentiate between private, professional and institutional clients.


A broadly heralded part (by the market participants in Switzerland) of the legislation with regard to trust companies which will henceforth be required to obtain a license and be prudentially supervised.


There are some 2’500 Swiss Independent Asset Managers managing approximately Chf 600bn in assets. It is estimated that 65% of these companies have fewer than three people on the work force. One might ask how will the smaller structures survive with the new legal burdens? Either by strengthening internal skills (possibly through mergers with other players in the sector) or by relying upon external service providers (outsourcing).


The ever-increasing cost of doing business and the constraints of the new legal framework may result in the long-awaited consolidation of the Independent Asset Management sector in Switzerland.


The introduction of FinSA and FinIA is viewed as an opportunity for the market participants to be on a regulatory level playing field, not only with peers in Switzerland, but also internationally.


Probus Compagnie S.A., part of the Probus Group (www.probus-group.com), has been active in asset management since 1984, a veteran of the Swiss Independent Asset Management industry. Having joined the team over 10 years ago I have never looked back with regret at having moved on from my former banking career. There have indeed been many changes in the past decade and there will undoubtedly be many more ahead, but the trust that is established between client and advisor through the independent nature of the business model is second to none.


This article has been carefully prepared, but it has been written in general terms and should be seen as broad guidance only. The article cannot be relied upon to cover specific situations and you should not act, or refrain from acting, upon the information contained therein without obtaining specific professional advice. Please contact Probus Group to discuss these matters in the context of your particular circumstance. Probus Group, its partners, employees and agents do not accept or assume any liability or duty of care for any loss arising from any action taken or not taken by anyone in reliance on the information in this article or for any decision based on it.

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