Appropriate measures in national regulation should, in particular, ensure the interests of market players which focus on the domestic market, e.g. when implementing international standards. Financial stability is also a focus point, but innovation must be possible. Disproportionate barriers to market entry, e.g. for fintech firms, should therefore be removed by adjusting the legal framework. Ongoing dialogue with the industry is important for all of these initiatives.
Systemically important banks
The global financial and economic crisis in 2008 showed that a big bank encountering serious difficulties can constitute a considerable burden for the economy, even in Switzerland. The Federal Council wants to prevent such banks from being too big to fail and to prevent the state from having to use tax revenues to save them.
The second review of the too-big-to-fail provisions by the Federal Council shows that Swiss regulation fares well in international comparison. It is suited to reducing the risk of systemically important banks so that no fundamental changes are required.
Gone concern capital requirements are intended to ensure that a bank in difficulty can be restructured and wound up in an orderly manner without financial assistance from the state. Following the introduction of gone concern capital requirements for UBS and Credit Suisse back in 2016, since 1 January 2019 these apply also to the domestically focused systemically important banks (PostFinance AG, Raiffeisen and Zürcher Kantonalbank). The level of the new requirements reflects the going concern capital requirements already in force today, which ensure the continuation of business activities in the event of major losses. Unlike for the big banks, however, only 40% of the requirements are reflected, as the domestically focused banks are less interconnected internationally.
At the end of November 2019, the Federal Council decided on the corresponding requirements for the parent entities of the two big banks.
Depositor protection and bank insolvency
On 15 February 2017, the Federal Council decided to improve the depositor protection system. The time taken to pay out protected deposits in case of a bank becoming bankrupt should be reduced. Furthermore, the upper limit of the system is to be set at 1.6% of the total secured deposits. In addition, the financing of the deposit protection system is to be strengthened with the deposit of securities to the value of 50% of the banks' contribution obligations.
For the corresponding amendment of the Banking Act, a consultation took place until the summer of 2019. The amendment will also include the insolvency provisions submitted to Parliament under the Financial Institutions Act and rejected to the Federal Council. It also contains a supplementary regulation on the segregation of securities. The dispatch of the Federal Council is expected in the spring of 2020.
Implementing Basel III
Basel III is the Basel Committee on Banking Supervision's (BCBS) comprehensive package of reforms which, in particular, aims to strengthen solvency and liquidity in the banking sector. In November 2017, the Federal Council decided to incorporate further elements of Basel III into national law. As of 2018, core capital must amount to at least 3% of total exposure (leverage ratio). The special requirements of up to 10% for systemically important banks remain. As of 2019, the new risk diversification regulations will also come into force and the Liquidity Coverage Ratio (LCR) must be fully achieved by then. In November 2019, the Federal Council announced that the introduction of the net stable funding ratio (NSFR) is planned for mid-2021.
Federal Financial Services Act (FinSA) and Financial Institutions Act (FinIA)
The FinSA and FinIA are part of the new regulatory financial market architecture. The purpose of both laws is to create a level playing field, boost the competitiveness of the financial centre and improve client protection.
The FinSA contains rules on providing financial services and offering financial instruments for all financial service providers and makes it easier for clients to enforce their claims against financial service providers. A differentiated supervisory regime for financial institutions (portfolio managers and trustees, managers of collective assets, fund management companies and securities firms) will be introduced with the FinIA.
Parliament adopted both bills in the final votes on 15 June 2018. The referendum deadline expired unused in autumn 2018. In parallel, work has begun on the ordinance provisions. The two new laws, together with their implementing provisions, have come into force on 1 January 2020.
Collective Investment Schemes Act (CISA)
The Limited Qualified Investor Fund (L-QIF) is an innovative fund product designed to enhance the attractiveness and innovative capacity of Switzerland as a fund centre. The L-QIF is neither subject to approval nor approval by the Swiss Financial Market Supervisory Authority (FINMA) nor is it supervised by the latter. However, it is only open to qualified investors and must be managed by an institution approved and supervised by FINMA - usually a fund management company (administration and portfolio management). The consultation about the corresponding amendment to the Collective Investment Schemes Act (CISA) ended in autumn 2019. The Federal Council dispatch is expected in spring 2020.
Insurance Policies Act (IPA)
The Insurance Policies Act (IPA) is over one hundred years old and no longer meets the requirements and needs of a modern law. Some urgent consumer protection concerns were implemented with a partial revision in 2006. The dispatch submitted by the Federal Council in June 2017 for a further partial revision is intended to adapt insurance contract law in other selected areas to the changed circumstances and to the need for reasonable and feasible insurance cover.
The draft takes up Parliament's proposal from the total revision of the IPA that failed in 2013 and has been under parliamentary deliberation since the first quarter of 2018. Entry into force of the partially revised IPA could occur by 2021.
Insurance Oversight Act (IOA)
In September 2016, the Federal Council instructed the FDF to prepare a revision of the Insurance Supervision Act (IOA) in collaboration with other authorities and the insurance industry. A legal basis should also be established which, in the event of insolvency, allows an insurance company to be restructured rather than left to go bankrupt. Furthermore, a client categorisation and associated facilitation by the supervisory authorities is to be introduced. In addition to other points for revision, the provisions on group supervision and insurance distribution should also be revised. The consultation on the partial revision of the VAG ended in February 2019. A message from the Federal Council is expected in the spring of 2020.
Amendments to the Anti-Money Laundering Act
The FATF conducted its fourth review of Switzerland in 2016. In its mutual evaluation report, it acknowledged the generally good quality of the Swiss system for combating money laundering and terrorist financing. At the same time, it identified weaknesses in certain areas and issued recommendations. In June 2017, the Federal Council instructed the Federal Department of Finance (FDF) to prepare a corresponding consultation draft which also reinforces the integrity of the Swiss financial centre. On 1 June 2018, the Federal Council initiated the consultation on amendments to the Anti-Money Laundering Act (AMLA). The consultation will last until 21 September 2018. The Federal Council adopted the dispatch for the attention of Parliament at the end of June 2019. Entry into force is not expected until the start of 2021 at the earliest.
Last modification 22.01.2020