Article 5 of the Financial Market Supervisory Act (FINMASA) defines FINMA's goals as follows: "In accordance with the financial market acts, financial market supervision has the objectives of protecting creditors, investors, and policy holders as well as ensuring the smooth functioning of the financial markets. It thus contributes to sustaining the reputation and competitiveness of Switzerland’s financial centre."
FINMA's mandate
As an independent supervisory authority, the Swiss Financial Market Supervisory Authority FINMA protects creditors, investors and policy holders, ensuring the smooth functioning of the financial markets and preserving their reputation. In doing so, it contributes indirectly to enhancing the competitiveness of the financial sector.
In its role as state supervisory authority, FINMA acts as an oversight authority of banks, insurance companies, exchanges, securities dealers, collective investment schemes, distributors and insurance intermediaries. It is responsible for combating money laundering and, where necessary, conducts restructuring and bankruptcy proceedings, and issues operating licences for companies in the supervised sectors. Through its supervisory activities, it ensures that supervised institutions comply with the requisite laws, ordinances, directives and regulations, and continue at all times to fulfil the licensing requirements.
FINMA imposes sanctions and provides administrative assistance to the extent permissible by law. It also supervises the disclosure of shareholdings, conducts the necessary proceedings, issues orders and, where wrongdoing is suspected, files criminal complaints with the Swiss Federal Department of Finance FDF. Moreover, FINMA supervises public takeover bids and, in particular, is the complaints body for appeals against decisions of the Takeover Board (TOB).
Finally, FINMA also acts as a regulatory body: it participates in legislative procedures, issues its own ordinances and circulars where authorised to do so, and is responsible for the recognition of self-regulatory standards.
Corporate Governance and Code of Conduct
FINMA is structured as a public law institution. It has functional, institutional and financial independence. Its management structure is modern: it has a board of directors, an executive board and an external auditor under the remit of the Federal Audit Office. As a counterbalance to FINMA's independence, it has been made accountable to and is subject to the overall political supervision of the Confederation. Furthermore, its decisions are appealable before a law court.
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 laws in one: the FINMASA umbrella
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 and the Act entered into full force on 1 January 2009.
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 seven laws governing financial market supervision. It is applicable in cases where the other financial market laws do not provide any particular regulations. It takes into account, however, the specificities of the different areas of supervision.
Along with FINMASA, two implementing ordinances also came into force on 1 January 2009:
- The ordinance governing the levying of fees and duties by the Swiss Financial Market Supervisory Authority passes on the costs of supervision to the individual areas supervised, as far as possible applying the 'user pays' principle and without cross-subsidising.
- The financial market audit ordinance combines in a single ordinance the provisions governing financial market auditing.