FinSA entered into force about 5 years ago, but January 1, 2025, was a major date for this set of regulations. It is the date when a major FinSA update took effect, determining how many financial institutions should conduct their business. Its scope was focused on increasing transparency—a key factor in the process of building client trust.
What exactly has changed, and what is the future of FinSA compliance? In this article, we prepared an overview of all the updates. Read on to learn more and prepare your organization effectively.
The Newest Updates in FinSA Compliance
The newest updates in FinSA introduced by FINMA apply directly to the organizations supervised by the latter, as well as those mentioned under Article 2 para. 1 let. a FinSA. These include entities operating in the Swiss market that are:
- financial services providers,
- client advisers,
- producers and providers of financial instruments.
At the same time, organizations offering services in the field of corporate finance (aka: providers of services offered to companies and their shareholders aiming to finance through capital markets) are exempt from the FinSA and FinSO regulations. In more detail, this means that:
- sell-side activities do not fall under FinSA and FinSO;
- buy-side activities fall under FinSA and FinSO.
The latest version of these regulations implements several critical changes, with the goal of increasing transparency of financial services providers. What exact updates were introduced in 2025?
General Information Duties
According to the latest updates, financial service providers must inform clients about the types of financial instruments and services offered, associated risks, and costs. Providers are required to document whether their investment advisory services are transaction-related or portfolio-related, ensuring clients receive pertinent information in a verifiable format.
Appropriateness and Suitability Assessments
The latest guidelines also specify that providers are obligated to assess clients' knowledge and experience concerning each relevant investment category. For asset management and portfolio-related advice, this assessment should align with the investment strategy's characteristics and the complexity and risk levels of the financial instruments used.
The regulation lists out a risk-based questionnaire that financial services providers must conduct with the client. This underlines the importance of informed risk management.
Use of Client Financial Instrument
The circular outlines conditions under which financial service providers may borrow financial instruments from clients' portfolios, emphasizing the necessity of obtaining prior and explicit client consent. Providers must disclose:
- information on the role of the financial service provider (principal vs. agent),
- information that ownership of the financial instruments is transferred to the counterparty, leaving only a claim for replacement of the same type and quantity,
- information that in the event of the counterparty’s or guarantor’s bankruptcy, the client holds only a non-preferential monetary claim of equivalent value,
- information that property and participation rights are transferred to the counterparty,
- information that any decrease in the value of the financial instruments remains the client’s risk,
- information that the client may terminate the agreement for the use of financial instruments immediately unless a fixed term has been explicitly agreed upon, in which case it will end upon expiration,
- information that the client has the right to exclude specific financial instruments from securities lending.
Conflicts of Interest
This specific clause states that if the financial provider considers using its own financial instruments and third-party financial instruments, they are obliged to take appropriate organizational measures to ensure that the selection is objective and does not favor its own instruments. If the conflict of interests is inevitable, the financial provider must disclose this information to the client.
Third-Party Compensation (Retrocessions)
Providers are required to disclose any compensation received from third parties in a clear and accessible manner. Specific amounts must be provided free of charge upon the client's request, and information about the compensation range should be communicated before the provision of financial services or contract conclusion.
What Will the Future of FinSA Compliance Bring Based on the Trends?
In the future of FinSA compliance, we expect to see a larger shift in transparency and data management. However, we cannot predict exactly the direction in which FINMA will proceed. Yet, one thing is certain—the regulatory environment will keep on changing, so you must be ready to adapt your organization and maintain compliance with the newest updates. How to make it easier? Discover our wealth management platform: WealthArc, a tech solution that will help you maintain compliance across your whole organization!
You might also read: WealthArc Teams Up with Polixis to Automate KYC Screening and Enhance Compliance Efficiency
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