The revised Insurance Supervision Act and Insurance Supervision Ordinance came into force on 1 January 2024, bringing about significant changes to the insurance intermediary market. Two and a half years later, FINMA took stock at a symposium in Bern attended by industry experts. It noted positive progress in client protection, but also emphasised that many people are still operating without authorisation. Around 12,000 untied insurance intermediaries are authorised by FINMA.
At its intermediary symposium held today, FINMA briefed the more than 1,000 attendees in Bern on market developments, registration issues and its initial experience with supervision since the revised Insurance Supervision Act and the revised Insurance Supervision Ordinance came into force on 1 January 2024. As of today, around 12,000 intermediaries are entered in the FINMA register. Since 1 January 2024, more than 7,000 intermediaries have newly registered, whilst around 3,000 have deregistered. At the symposium, FINMA made it clear that, when the new intermediary regulation came into force, it was also confronted with a significant volume of unauthorised activity and abusive behaviour at the point of sale. This is apparent not only from its own findings but also from numerous complaints from clients: “Thousands of insurance clients are affected every year. Client protection is and remains FINMA’s top priority. We are strongly committed to ensuring that policyholders in Switzerland can rely on trustworthy and robust insurance intermediation,” said FINMA CEO Stefan Walter at the symposium.
Supervision is established and is effective
FINMA has noted many positive developments. The new provisions were generally implemented swiftly and consistently, which was reflected, among other things, in a close dialogue with various industry representatives, for example to clarify fundamental issues or implementation arrangements. This was particularly evident in the development of the new minimum training standards. The supervisory framework is now firmly established and is proving effective. Overall, the quality of the distribution markets has clearly improved, as evidenced, among other things, by progress in distribution controlling and the establishment of training standards accompanied by appropriate further training programmes.
FINMA identifies fraudulent practices
However, FINMA still believes there is a need for action to combat abuse. A key problem is the provision of incorrect advice by inadequately qualified intermediaries, for example when unsuitable life insurance policies are concluded without transparent information on costs being provided or an assessment of suitability being conducted. In some cases, there is a lack of awareness of the duty to provide information. In particularly problematic cases, pressure is exerted or unrealistic returns are promised. FINMA also monitors fraudulent practices such as forged signatures, identity theft and falsified qualifications. Cold calling – although prohibited – still occurs, often in connection with opaque business models. The number of people operating without authorisation remains high. FINMA estimates that they account for around 10% of all market participants. If FINMA receives information suggesting misconduct, it investigates the matter and takes decisive action.
FINMA orders follow-up consultations
Specifically, FINMA has already intervened in numerous cases and, among other measures, halted distribution. This also resulted in many inadequately qualified individuals being removed from the intermediary market. Intermediaries who fail to meet their obligations are consistently issued with warnings. In serious cases, FINMA files criminal charges. It is also possible for registrations to be deleted or for licences to be withdrawn. A key tool is the ordering of follow-up consultations, with the aim of reviewing current insurance cover and, where necessary, reaching fair solutions for policyholders. FINMA has already initiated such follow-up consultations at a large number of insurance companies. Thousands of clients are affected. The supervisory authority also monitors the implementation and outcomes of the follow-up consultations in detail.
Despite the progress made, it is clear that the desired level of client protection has not yet been fully achieved in practice. It is also clear that irregularities in distribution harm not only policyholders but also the market participants themselves – for example, through damage to their reputation and higher costs. FINMA is calling for a clear focus on client-centred advice, products offering genuine added value, and a critical review of misaligned incentives, such as those arising from high commissions. All market participants bear responsibility for preventing abuse and protecting clients – and thus for the integrity and reputation of Switzerland as an insurance hub.
