Client Advisors – Impact of the New Financial Market Regulation
- Obligation to register as natural persons
- Knowledge of the rules of conduct
- Appropriate education
1. Current Regulatory Regime
Client advisors are currently not specifically subject to any regulatory requirements and prudential supervision by the Swiss Financial Market Supervisory Authority (FINMA) except for certain insurance intermediaries. Those are currently required to register with FINMA pursuant to the Insurance Supervision Act.
2. Overview of the New Financial Market Regulation
FIDLEG provides an obligation to register and to adhere to the rules of conduct for client advisors. According to FIDLEG, the term "client advisors" refers to natural persons. It has to be interpreted extensively and thus includes, among others, asset managers, investment advisors, insurance intermediaries and distributors, including distributors of collective investment schemes. Usually, client advisors are employed with financial services providers (entities) and are not identical with them.
To be eligible for registration, client advisors must meet the statutory registration requirements: (i) They must not be convicted of any offence pursuant to FIDLEG; (ii) they must not be subject to a ban from an activity in the financial industry; (iii) they must take out insurance for professional liability or have equivalent security; and (iv) they must join an ombuds organization. As client advisors are usually employed with financial service providers, requirements (iii) and (iv) can instead be fulfilled by their employers.
Additionally, client advisors are required to have appropriate education in their field and be familiar with the rules of conduct under FIDLEG.
3. Selected Key Points for Client Advisors
Client advisors must be registered with a (new) registration authority. Financial services providers (such as banks) that employ client advisors should ensure that their client advisor employees are duly registered.
Although client advisors are not subject to the prudential supervision of FINMA, they may be subject to enforcement actions by FINMA if they breach any duties under FIDLEG.