The Swiss Financial Services Act (FinSA)
The Swiss Financial Services Act (FinSA) entered into force on 01 January 2020, with a transitional period of two years for most of its provisions. This new law aims to strengthen investor protection and to establish comparable standards for financial service providers.
FinSA is closely aligned with European regulatory reforms implemented during the last five years It mainly covers the following areas:
- Enhancement of investor protection;
- Transparency of financial products and financial services provision;
- Revision of organizational requirements for the provision of services.
FinSA applies to financial services provided to clients domiciled in Switzerland as well as to financial services provided in Switzerland, e.g. services provided to foreign domiciled clients by Swiss banks.
FinSA will be fully implemented by EFG Bank Ltd (EFG) by the end of 2021. EFG is committed to applying all of the corresponding requirements with effect from 01 January 2022.
Please find below the key information required under FinSA.
Information about EFG and its supervisory authority
EFG Bank Ltd is a fully licensed and authorised Swiss bank and securities dealer supervised and regulated by the Swiss Financial Market Supervisory Authority (FINMA).
Contact details for EFG
EFG Bank AG
P.O. Box 6012
CH - 8022 Zurich
+41 44 226 1717
Contact details for FINMA
Swiss Financial Market Supervisory Authority FINMA
+41 (0)31-327 91 00
Information about the Swiss Banking Ombudsman
Ensuring that our clients are fully satisfied with our products and services is our priority. Please contact your Client Relationship Officer (CRO) if our service does not meet your expectations so that we can endeavour to find an appropriate solution. If we are unable to resolve the issue, you can contact the Swiss Banking Ombudsman, an independent mediation agency to which EFG is affiliated. Contact details for the Swiss Banking Ombudsman can be obtained from your CRO or on the Internet at: http://www.bankingombudsman.ch/en/
Swiss Banking Ombudsman
FinSA requires clients to be classified based on three categories: retail (Retail), professional (Professional) or institutional clients (Institutional Clients). Each category benefits from a different level of investor protection with regard to information duties, suitability and appropriateness obligations, as well as documentation and accountability requirements.
Retail Clients are clients who are not Professional Clients.
Professional Clients are:
a. Financial intermediaries (including IAM);
c. Foreign clients subject to prudential supervision;
d. Central banks;
e. Public entities with professional treasury operations;
f. Occupational pension schemes;
g. Companies with professional treasury operations;
h. Large companies*;
i. Private investment structures with professional treasury operations created for high-net-worth retail clients.
Institutional Clients are Professional Clients, as highlighted above in letters a to d, as well as national and supranational public entities with professional treasury operations.
Unless clients are informed otherwise, they will be classified as Retail Clients, giving them the most comprehensive level of client protection.
Provided EFG’s clients meet the necessary requirements (volume of financial assets, knowledge and experience), they may request a change of classification. Clients should contact their CRO if they wish to request this change.
Professional and Institutional Clients are considered to be ‘qualified investors’ under the Collective Investment Schemes Act (CISA).
Retail Clients who have entered into a permanent discretionary mandate or portfolio advisory contract are also considered as qualified investors under CISA. This allows them to invest in collective investment schemes that are reserved for qualified investors. If clients with a portfolio advisory contract do not wish to be treated as qualified investors, they can contact their CRO to submit a corresponding request.
The Independent Asset Managers (IAMs) are responsible for classifying their clients in accordance with the FinSA requirements. The Bank will only classify these clients as Retail Clients (regardless of the IAM’s classification).
Since the duty of managing the clients lies with the IAM, the Bank does not collect the client profile questionnaire and does not perform suitability or appropriateness checks on the transactions. In other words, the Bank is released from the FinSA obligations in relation to content, timing and form of information, documentation and rendering of account.
Main differences in the level of protection between a Retail Client and a Professional Client in connection with investment advisory and discretionary management services
Reduced appropriateness and suitability assessment:
To the extent that the bank provides portfolio management or investment advisory services to its clients, the bank will be required to conduct a suitability or appropriateness assessment before providing such services. Please note that if EFG’s services are provided exclusively on an execution-only basis, no suitability assessment will be made.
For a Retail Client, EFG generally checks whether a service or product is appropriate, taking into account the knowledge and experience of the client. For a Professional Client, the bank assumes that the client has financial capacity and sufficient knowledge and experience to understand and assess the risks of a service or product. Therefore, EFG does not perform an appropriateness test for Professional Clients.
In addition, for a Retail Client the bank takes into account the knowledge and experience of the client, the financial viability to bear the risks of the investments as well as the investment objectives when checking whether a service or product is suitable. For a Professional Client, the bank assumes that the client has sufficient knowledge and experience to bear the risks of the investments. Therefore, EFG only assesses the investment objectives when assessing the suitability of a service or product.
If the bank has the risk profile to determine a Professional Client's financial situation and knowledge and experience on file, EFG will not take it into account going forward.
Investor profile (Client Profile Questionnaire):
For a Retail Client, EFG uses the full questionnaire to determine the investor profile (Client Profile Questionnaire). The determined investor profile is an aid in investment advice as well as with regards to the mandate selection for a discretionary mandate. For a Professional Client, the scope of the questionnaire to determine the investor profile is reduced to the investment objectives.
For a Professional Client, the bank is entitled to assume that the client has the necessary knowledge and experience to understand the risks associated with the products, transactions or services, and that any investment risks associated with the transaction or asset management are financially viable to the Professional Client in accordance with his investment objectives. A product information document or basic information document does not have to be provided to a Professional Client.
Opting out / Opting in:
FinSA allows clients to ‘opt in’ or ‘opt out’ under certain conditions at the clients’ own request.
High-net-worth Retail Clients and private investment structures created for them may declare that they wish to be treated as Professional Clients (opting out) and may do so by completing the relevant form for a change of classification. Clients will be informed if EFG considers the conditions to be met.
Clients who are not Professional Clients, as defined by FinSA, may request a change of classification (opting out) if they meet one of the following requirements:
- The client has the necessary knowledge based on training, education and professional experience, or on the basis of comparable experience in the financial sector, to understand the risks associated with the investments and has eligible assets of at least CHF 500,000; or
- The client holds eligible assets of at least CHF 2 million.
Clients who would like to opt out must do so for their entire relationship with EFG. It is not possible to opt out solely for individual services or specific classes of financial products.
Professional Clients as defined by FinSA, may request a change of classification (opting out) if they wish to be treated as Institutional Clients.
For additional information on opting out requirements please contact your CRO.
Professional Clients may request to be treated as Retail Clients (opting in) in order to benefit from a higher level of protection.
Institutional Clients may opt in and be treated as Professional Clients. However, they cannot request that they be treated as Retail Clients.
For additional information on opting in requirements please contact your CRO.
EFG’s clients should be clearly informed about the risks associated with investing in financial instruments and be familiar with and understand those risks before using a financial service or investing in a financial instrument.
The brochure ‘Risks Involved in Trading Financial Instruments’ provides general information about financial services and the characteristics and risks of financial instruments. The brochure can be downloaded here:
Key Information Document
The Key Information Document (KID) is designed to inform Retail Clients about the nature and risks of the products offered by defining the characteristics of the investment product in a factual and standardised way. FinSA requires that a KID document be made available to Retail Clients, and EFG will provide such documents if they are produced by the issuer.
For all transactions where a KID is required, Retail Clients will receive the KID document directly from the bank.
Financial service information
EFG offers a comprehensive range of financial services, consisting primarily of portfolio management (discretionary mandates), investment advice (advisory contracts), securities lending, Lombard loans and investment execution services.
The main information about these offerings – including the definition, key benefits and key risks of the service – can be found in the following factsheets:
Information about costs
Costs and fees may be incurred in connection with the provision of financial services. For further information, please consult the brochure ‘Standard commissions and charges’. The brochure is updated from time to time, as required, and is available on our website at: www.efgbank.com/efgbankpricing
Alternatively, printed copies of the brochure can be requested from your CRO or at any EFG branch in Switzerland.
If you wish to receive an overview of the costs and fees for the services you use, your CRO will be pleased to assist you.
‘Best execution’ is the term used to describe EFG’s obligation to ensure that client orders are executed in such a way as to achieve the best possible outcome in terms of cost, timing and quality. EFG will ensure best execution for all client orders, irrespective of whether the order is executed by EFG itself, its affiliates or through third-party brokers.
Conflicts of interest and information on distribution fees
In accordance with Art. 25 of FinSA, EFG is required to identify and manage any potential or actual conflicts of interest. Conflicts of interest may arise from EFG’s various business activities. Notably, EFG may engage in other businesses simultaneously with its discretionary or advisory services and may render similar discretionary or advisory services to various clients. As such, EFG shall not be deemed to be acting in conflict with the interests of any of its clients. EFG may, at any time, buy or sell financial instruments or products that are subject to its discretionary or advisory services in the course of its proprietary trading activities. EFG has put in place appropriate controls and organisational measures to mitigate the risks of conflicts of interest and to protect clients from potential disadvantages. Examples include establishing information restrictions, implementing separate management processes, or refraining from offering direct compensation incentives. In case of unavoidable conflicts of interest, the conflict is immediately disclosed in detail to the client.
The Bank may favour the use of EFG proprietary instruments over instruments of third-party providers/issuers, subject to the general principle that EFG always acts in the clients’ best interests and in compliance with best execution principles and its internal policies.
EFG accepts renumeration from third parties that may lead to conflicts of interest on the part of the Bank. This may create incentives for EFG to favour financial instruments with higher monetary benefits over financial instruments paying no, or less, monetary benefits.
Please refer to the ‘Information document on distribution fees and non-monetary benefits’ for further details.
To identify and manage potential/actual conflicts of interest, EFG regularly conducts an assessment of the adequacy and suitability of financial instruments and products in which EFG may have an interest or connection. The assessment is carried out in the same manner and using equivalent criteria to those used by EFG when investing in other instruments with which EFG has no connection or direct interest.
Furthermore, EFG has implemented appropriate measures regarding the avoidance and mitigation of potential/actual conflicts of interests in accordance with applicable laws and regulations.
 The masculine form shall include the feminine and the singular shall include the plural and vice versa.
*A large company is a company which exceeds two of the following parameters:
- Balance sheet total of CHF 20 million,
- Turnover of CHF 40 million,
- Equity of CHF 2 million.