When do I have to do an appropriateness test and what does exactly need to be assessed?


The new Financial Services Act (FinSA) and the implementing Financial Services Ordinance (FinSO), the final version of which is expected to be released on 6 November, 2019 contain several new duties of conduct for those providing financial services. During the legislative process, of all these new duties, the duty to run a suitability test and the duty to run an appropriateness test caught the most attention. For this reason, this FIDLEG SOLUTION News 10/2019 explains in detail, when an appropriateness test needs to be done and what exactly needs to be assessed hereunder.

In a next, separate FIDLEG SOLUTION News, we will analyze as well the suitability test.

Client segmentation according to FinSA

Similar to MiFID II, art. 4 para. 1 of the new Financial Services Act (FinSA) stipulates that all financial service providers under FinSA, including asset managers, have to classify their clients, for whom they provide financial services, such as investment advice or asset management, as follows:

  1. Private clients
  2. Professional clients
  3. Institutional clients (subgroup of professional clients)

The table below provides an overview of the client categorization under FinSA.

Risk Management and Compliance of Swiss Asset Managers according to FinIA

Pursuant to art. 2 para. 1 of the new Financial Institutions Act (FinIA), asset managers who are currently "only" subject to the Ant Money Laundering Act (AMLA) will be deemed to be financial institutions which, on the basis of art. 5 para. 1 FinIA, require a licence from FINMA and, on the basis of art. 7 para. 2 FinIA, are supervised by a supervisory organisation. In addition, based on art. 7 para. 1 FinIA, they must also fulfill the general requirements set out in section 2 of FinIA (i.e. art. 5 - 16 FinIA) and the specific requirements for asset managers (i.e. art. 17 - 23 FinIA).

From Distribution to the Offer of Collective Investment Schemes under the Financial Services Act

The Financial Services Act (FSA) brings a major change with regard to collective investment schemes: the previous concept of distribution of collective investment schemes (CIS) will be replaced by the concept of the offer of CIS. This FIDLEG SOLUTION News explains exactly what this change will mean.

It is important to know that the concept of the offer does not only apply to CIS. Rather, it applies to all financial instruments.

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