FINMA has commented on the recommendations made by the Control Committees (CC) in their report on the financial crisis and the handing over of UBS client data. FINMA's comments underscore the independence of its decision-making. Based on the information available to it today, FINMA will not reinvestigate the question of individual culpability of the former UBS senior executives.
On 31 May 2010, the Control Committees of the National Council and the Council of States issued the results of their comprehensive review of how the federal authorities dealt with the pressure of the financial crisis and the handing over of UBS client data to the US authorities. FINMA was asked to comment on the report's conclusions and recommendations in connection with itself by the end of 2010. FINMA's published response to the issues addressed by the CC focuses on the following key points:
Independent decisions by FINMA
Decisions made by FINMA are determined solely by the issue in question and the authority's legal mandate and are neither guided by pressure from third parties nor influenced by the institutions under its supervision. In exercising its protective function, FINMA makes its decisions independently. FINMA attaches particular importance to the fact that the former Swiss Federal Banking Commission (now FINMA), in response to its own risk assessment, advised the Federal Council clearly and in good time that in the fulfilment of its legal mandate it would ultimately be obliged to order the disclosure of the client data under the Banking Act. Contrary to the findings of the CC, however, FINMA was not put under pressure by the Federal Council to arrive at this decision.
No further investigations against former UBS senior executives based on the information presently available
Given the far-reaching impacts of the events in question, the CC asked FINMA to clarify in greater detail the extent to which the most senior executives of UBS were aware of the QIA violations being committed by the bank and its staff. FINMA is well aware of the impact of these events and, in conjunction with external experts, has therefore carefully examined the possibilities provided by regulatory law for further investigations. It concluded that no new evidence has emerged which would warrant a review of earlier regulatory investigations, nor would the instruments at the disposal of FINMA permit such action.
In its investigations in 2008 of the events surrounding the violation of American regulations governing cross-border private banking, the SFBC took a close and careful look at the responsibility borne by the Head of Wealth Management, the CEO and the Chairman of the UBS Board of Directors who were in office at the time. In particular, it examined whether they bore any individual responsibility for the QIA violations UBS AG was found to have committed. Based on the information that came to light in an extensive investigation, it concluded that there were no grounds to order their removal as officers of the bank. On the assumption that FINMA does not come into possession of any previously unknown evidence showing that these persons have committed a serious violation of their obligations, then at present there are also no grounds for instigating proceedings against these persons to investigate proper business conduct should they again assume an executive function at an institution subject to supervision by FINMA. However, FINMA requires a formal written declaration from these individuals that they had no knowledge of any breaches of duty relevant under Swiss regulatory law. If such a declaration should prove to be untrue, this would lead to criminal prosecution. FINMA already has grounds to instigate proceedings against a number of lower ranking company officers based on its current information, and would do so if any of these individuals were to attempt to occupy an executive position requiring the assurance of proper business conduct within the supervised sector in the coming years.
Extensive meetings between FINMA and the Federal Council
The CC requested that the Federal Council invite the Chairman of the FINMA Board of Directors for regular meetings and exchanges of information. In addition to this, the Chairman of the FINMA Board of Directors should meet with the Economics Committee of the Federal Council when the FINMA Board of Directors so requests. The Swiss Financial Market Supervision Act requires FINMA to meet at least once with the Federal Council. FINMA regards this exchange as a valuable complement to its independence and therefore expressly welcomes the thrust of the CC's recommendation. FINMA also regards discussions with a committee of the Federal Council as very valuable.
Collaboration between FINMA and the SNB
The CC asked for a clarification of roles and competencies, in particular with respect to the SNB and FINMA. FINMA considers the present legal regulations as basically correct. The clear allocation of competencies and accountabilities currently in place is of central importance. Supervisory instruments should, as far as possible, serve only one purpose, and one authority should be responsible for their application. It is also necessary to clearly allocate competencies and accountabilities for any new instruments under discussion. Functional overlaps or, worse, a commingling of responsibilities would jeopardise the effectiveness of these instruments and ultimately weaken both institutions.
Contact
Dr Alain Bichsel, Head of Communications, Phone +41 (0)31 327 91 70, alain.bichsel@finma.ch
