With the introduction of the new financial market legislation in Switzerland, the legal regulation of the asset management industry is also increasing. Independent asset managers are now subject to prudential supervision and thus a licensing requirement and must comply with the rules of conduct of the FIDLEG.
Independent asset managers
An independent asset manager is a person who, on the basis of a mandate, can professionally dispose of clients‘ assets in the name and for the account of clients. An independent asset manager carries out his activity on a commercial basis and professionally within the meaning of money laundering law,
- if he achieves gross proceeds of more than CHF 50,000 per calendar year;
- enters into business relations with more than 20 contracting parties per calendar year which are not limited to a one-off activity, or
- maintains at least 20 such relationships per calendar year or has unlimited power of disposal over third-party assets that exceed CHF 5 million at any time.
Authorisation and supervision
Pursuant to Art. 5 para. 1 FINIG, UVVs now require authorisation from FINMA, with ongoing supervision of UVVs being exercised by supervisory organisations, which in turn are both authorised and supervised by FINMA. FINMA will also be responsible for any sanctions or supervisory enforcement proceedings. The supervisory organisations will also continue to ensure the monitoring of compliance with the provisions under the Anti-Money Laundering Act, which was previously the responsibility of the self-regulatory organisations.
General licensing requirements
An UVV must cumulatively fulfil the following conditions in order to obtain a licence:
Organisation: According to FINIG, a financial institution must establish appropriate rules for corporate governance and have an organisational structure that ensures it can meet its legal obligations.
Personnel and guarantee: Art. 11 para. 1 and para. 2 FINIG stipulate that the managing directors of a financial institution must enjoy a good reputation, offer a guarantee of irreproachable business activity and have the necessary qualifications for their activities.
Ombudsman’s office: Financial institutions must join an ombudsman’s office within the meaning of Art. 16 FINIG at the latest when they commence their activities. An UVV is obliged to inform its clients about the possibility of a mediation procedure before the ombudsman’s office.
Specific licensing requirements for UVVs
In addition to the general licensing requirements outlined above, the following specific licensing requirements apply to a UVV:
Qualified management: The UVV must have at least two qualified managing directors. A person is considered to be qualified for the management if he or she has received appropriate training of at least 40 hours and has at least five years of professional experience in asset management. The separation of personnel for overall management, supervision and control (board of directors) and executive management is not explicitly provided for UVVs.
Risk management and internal control: In terms of organisation, UVVs are required to have adequately equipped risk management and effective internal controls. Among other things, these must ensure compliance with legal and corporate regulations. The tasks of risk management and internal control can either be assumed by a qualified management person or qualified employees, or delegated to a qualified external body.
Minimum capital and collateral: The legislator requires UVVs to have a minimum capital of CHF 100,000 permanently paid up in cash. Own funds of 25 % of the fixed costs of the last annual financial statement up to a maximum of CHF 10 million must always be available.
Licensing procedure and application
As part of the licensing procedure, FINMA examines whether the applicant asset manager fulfils the aforementioned licensing requirements and whether he can comply with the other legal requirements and obligations, such as the implementation and monitoring of the duties of conduct prescribed in the law, even after the licence has been granted. In parallel with the preparation of the licence application, the UVV must mandate a licence auditor to examine the licence application and draw up an independent audit report for the attention of FINMA. In his report, the auditor shall comment in particular on the fulfilment of the licensing conditions.
Prudential supervision by FINMA and AO
Prudential supervision of the UVVs will be carried out by FINMA in cooperation with the supervisory organisation. In order to be able to fulfil their supervision, the supervisory organisations will define a risk assessment system as well as minimum requirements for the supervisory concept. The frequency and intensity of the review by the supervisory authority will depend on the risk profile of the activity and the organisation of the UVV, with a requirement that a review be carried out by the supervisory authority at least every four years. In the years in which no review takes place, UVVs must give account to their supervisory organisations in a report on the conformity of their business activities with the law.