Parliament approved the Federal Act on the Swiss Financial Market Supervisory Authority (FINMASA) on 22 June 2007. The Federal Council ratified the implementing provisions for FINMASA on 15 October 2008, with the Act entering into full force on 1 January 2009.
The aim of the new Financial Market Supervisory Authority
The object of FINMASA is to group together under one authority the government supervision of banks, insurance companies, stock exchanges and securities dealers as well as other financial intermediaries in Switzerland. The Act merges three bodies – the Federal Office of Private Insurance (FOPI), the Swiss Federal Banking Commission (SFBC) and the Anti-Money Laundering Control Authority – into the Swiss Financial Market Supervisory Authority FINMA.
The aim of the financial market supervisory authority is to protect creditors, investors, insured persons and to ensure the general functioning of the financial markets in accordance with financial market legislation. It thus helps reinforce Switzerland’s image and competitiveness as a financial centre (Article 5, FINMASA).
Organisational reorientation
With a GDP contribution of 12% and a workforce of around 200,000, the financial sector plays a significant role in the Swiss economy. At the same time, and as the financial market crisis has so clearly demonstrated, the sheer magnitude and degree of interdependence in the financial sector have given rise to systemic risks that could have a negative impact on the entire economy in Switzerland.
Against the backdrop of the extremely dynamic developments in the financial markets and the ever increasing complexity of financial market supervision, the institutional structure of the existing supervisory bodies is being enhanced. With the establishment of an integrated financial market supervisory authority, an organisational reorientation is underway to strengthen financial market supervision in Switzerland and to give it greater weight on an international scale.
Corporate governance and code of conduct
FINMA is structured as an institution under public law. It has functional, institutional and financial independence as well as a modern management structure with a Board of Directors, Executive Board and the Swiss Federal Audit Office as external auditor. As a counterbalance to FINMA’s independence, it has been made accountable to and is subject to the overall political supervision of the Federal Government.
It is of vital importance to FINMA that the people who are active on its behalf conduct themselves with integrity and refrain from any activity that could jeopardise its image and credibility. The code of conduct issued by FINMA sets out strict instructions, particularly with regard to conflicts of interest that may arise in connection with activities carried out on FINMA’s behalf. This code of conduct is directed at all persons acting for FINMA, namely the Board of Directors and all staff members, whether they are employed on either a permanent or temporary basis.
Seven pieces of legislation under the FINMASA umbrella
In addition to organisational issues regarding FINMA as an institution, FINMASA also sets out principles governing financial market regulation, liability rules and harmonised supervisory instruments and sanctions. FINMASA therefore functions as an umbrella law for the other laws governing financial market supervision. The legal mandate conferred on the supervisory authority remains unchanged, however, and takes into account the specifities of the different areas of supervision. Banks, securities dealers, stock exchanges, insurers and collective investment schemes must thus continue to satisfy the respective legal criteria (see below). The system of self-regulation established under the Anti-Money Laundering Act and the Stock Exchange Act will likewise be maintained.
With FINMASA, two implementing ordinances were approved to take effect on 1 January 2009.