The Swiss Register of Client Advisors
The Swiss Federal Financial Services Act (FinSA) and the Swiss Federal Financial Institutions Act (FinIA) came into force on January 1st, 2020, introducing an entirely new framework of conduct rules for Swiss financial intermediaries.
The changes introduced by FinSA/FinIA involve client categories, client advisors, and authorization and representation requirements.
One completely new requirement is the obligation for client advisors to be entered into a Swiss register of client advisors before they offer financial services to clients domiciled in Switzerland. This obligation, in accordance with article 28 of FinSA, applies to:
- client advisors of domestic financial service providers that are not supervised under article 3 of FINMASA;
- client advisors of foreign financial service providers (subject to some exemptions, see below)
Who are client advisors?
Article 3 of FinSA defines client advisors as:
natural persons who perform financial services on behalf of a financial service provider or in their own capacity as financial service providers.
The same article defines offer as:
any invitation containing sufficient information on the terms of the offer and the financial instrument itself for the purchase of said financial instrument.
In practical terms, in the context of fund offering, a client advisor will be a person talking to potential investors and handing out information about the product that may lead to investments, such as the prospectus, KIID, and similar. Note that a client advisor is not necessarily only the salesperson; for example, a CEO going to meetings with prospects will also fit the definition.
What is the client advisor register?
The client advisor register is held by a registration office. The latter is licensed by FINMA to manage the register and all the related activity (entries, deletions, updates).
Client advisors will apply with the registration office for entering and updating their records. Any changes in information relevant to the registration will be notified to the registration office either by the client advisors, the service provider they work for, or the competent supervisory authority. Client advisors will be removed from the register if the changes indicate that they are no longer qualified or authorized for being registered.
The registration office will make the register data publicly available.
Who is eligible to be registered?
Client advisors can be registered in the Swiss register of client advisors provided that:
- they have sufficient knowledge of the FinSA rules of conduct (art. 6 FinSA);
- they possess the expertise required for their work
(art. 6 FinSA); - they have proper professional liability insurance or equivalent financial guarantees (art. 29 FinSA); and
- they are affiliated with an ombudsman (art. 29 and 74 FinSA), either themselves as service providers or the service providers they work for.
When does the obligation enter into force?
FinSA stipulates that client advisors must initially apply for registration within six months of the entry into force of FinSA.
In reality, the six-months delay will run from the date that the first registration office is licensed. As of June 1st, 2020, no registration office has been authorized yet.
In addition, the Financial Services Ordinance (FinSO) establishes a prolonged delay of 2 years starting from January 1st, 2020, for certifying that they have sufficient knowledge of the FinSA rules of conduct (Art. 105 FinSO) and that they possess the expertise required for their work (Art. 104 FinSO).
Do all client advisors need to register?
No. FinSA and FinSO detail the criteria for exemption. The following categories of client advisors are not subject to the obligation:
- client advisors of a Swiss financial services provider that is supervised under article 3 of FINMASA (art. 28 FinSA)
- client advisors of a foreign financial services provider that is subject to prudential supervision provided that they only provide their services to professional or institutional clients in Switzerland (art. 31 FinSO)
Note that client advisors of foreign financial services providers that provide services to private clients are required to register regardless of whether they are supervised or not.
Do Swiss distributors need to register?
Under CISA, Swiss distributors have been licensed by FINMA. As of January 1st, 2020, the distribution license no longer exists. As such, Swiss distributors are no longer supervised under article 3 of FINMASA (art. 28 FinSA). As such, they are subject to the requirement to register as client advisors.
What information will be public?
Article 30 FinSA stipulates that the register will publish at least the following information about client advisors:
- full name;
- name and address of the service provider for which the client advisor is working;
- function and title of the client advisor with the service provider;
- field of activity;
- education and training accomplished;
- the ombudsman they are affiliated with;
- date of registration.
How to get registered?
FINMA has not yet licensed any registration office, and they will probably do that towards the beginning of 2020. Contact Regiswiss to be kept informed of when registration will become possible and how to do it.
What else do I need to know to distribute a fund in Switzerland?
Depending on what client category you are addressing, there may be other requirements and obligations you need to fulfil. We have prepared a quick guide to offering your funds in Switzerland.