SFA calls for information ‘level playing field

As part of the consultation process on FINMA’s Distribution Report, the Swiss Funds Association (SFA) has called for a level-playing field with regard to the quality of information provided to retail investors.

The Swiss Financial Market Supervisory Authority (FINMA) is seeking to standardize The distribution of financial products with its Distribution Report.

Switzerland, as a federation, has thus far been governed by different regulations. The SFA is supporting FINMA’s action to harmonise the rules, but with certain caveats.

SFA president Martin Thommen said: “Given the major differences at the point of sale in certain instances, investor protection depends on the legal nature of the financial product in question.”

“Funds in particular are currently subject to much stricter regulation than other investment instruments. The goal should be to ensure that products distributed to retail investors provide the same quality of information.

“However, imposing an obligation to obtain approval on all financial products should be rejected as it would do little to achieve this objective given that it would not in and of itself ensure objective client advice at the point of sale. We therefore also propose refraining from imposing an obligation to obtain prior approval on funds for qualified investors in the future.”

The SFA proposes that all financial intermediaries that offer portfolio or investment advisory services or distribute financial products in Switzerland should be required to obtain approval from FINMA and should be supervised by it.

SFA chief executive Matthäus Den Otter added: “To achieve these improvements, we believe it makes sense to have a new federal act that governs applicability and supervision with respect to the financial intermediaries concerned. However, the Federal Council should refrain from issuing an ordinance on conduct in securities trading and the distribution of collective investment schemes given that the need for action is not in the area that is already strong regulated, but instead where there is currently no or only insufficient regulation.”

The SFA believes also that in addition to standardized information quality and sufficient protection for retail investors, the focus should also be on harmonizing the disclosure obligations for all financial products distributed in Switzerland. In particular it would like to see the introducion of a standardized description for all products comparable to the KID (Key Investor Document) for EU investment funds (UCITS).

 

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Jonathan Boyd
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