The sections Supervision of Wealth Management Banks and Securities Dealers, and Supervision of Retail, Commercial and Trading Banks are responsible for monitoring banks, securities dealers and mortgage bond institutions. Institutions that form an economic unit with other companies in the financial sector are also monitored on a consolidated basis as part of the supervision of financial services groups.
Once licensed, institutions are subject to ongoing supervision. This is to monitor continued compliance with licensing conditions and other statutory and regulatory requirements. In the event of shortcomings or breaches of these requirements, measures are imposed to rectify the situation. The regulatory framework for this supervision is provided in particular by the Financial Market Supervision Act, various specific supervisory laws and their associated implementing provisions. In addition, numerous details are regulated by means of circulars. Self-regulation also plays an important role. For example, the guidelines issued by the Swiss Bankers Association are generally recognised by FINMA as minimum standards for banks and securities dealers.
Under the dual supervisory system, FINMA's supervisory activities draw heavily on the work of recognised audit firms. As an extended arm of FINMA, these firms conduct regular audits of institutions and, in so doing, provide direct supervision. They report the findings of their audits to FINMA. To achieve timely and broad supervision, FINMA conducts targeted on-site reviews to complement the dual supervisory system. Its limited staff resources are primarily deployed for institutions that require extra attention based on their risk profile. FINMA's risk-based supervisory approach rests on assigning banks and securities dealers to different supervisory categories. There are five different supervisory categories to which institutions are assigned according to predefined criteria. In addition, each institution is subject to a rating process. As a consequence, both the supervisory category and the rating system determine the levels of supervision applied to each institution.