The Beginning of a New Era for Trustees Active in Switzerland
The adoption today by the Swiss Federal Council of the final versions of the Financial Services Ordinance (FinSO) and Financial Institutions Ordinance (FinIO) marks the beginning of a new era for trustees active on Swiss soil. Together with the Financial Services Act (FinSA) and Financial Institutions Act (FinIA), adopted on 15 June 2018, the ordinances will come into force on 1 January 2020 and will bring about profound changes within the industry, as the profession transitions in the years to come from a (largely) unregulated one to a regulated one.
Many trust professionals feared that the specific features of trust relationships would not be fully understood by the Swiss legislative bodies and would thus not be taken into account in the new regulatory framework. At the onset, it did indeed seem that trustees had simply been considered as one type of asset manager.
The final contents of the texts are however reassuring in many respects. For instance, the education and professional experience requirements applicable to members of a trust company's senior management have been adapted in order to reflect industry standards. The Swiss government also carved out an exemption from licensing for private trust companies, whether they are held in trust, by a foundation or directly by a family member, as is the rule in many other jurisdictions. Finally, the fact that trustees do not provide financial services and, as a general rule, do not act upon the instructions of clients has now been fully recognised.
New supervisory organisations, which are to be entrusted with overseeing the activities carried out by licensed trustees and portfolio managers, will be established in the months to come. The Swiss Financial Market Supervisory Authority (FINMA), in charge of approving and supervising these new organisations, has already started working on the guidelines they will be required to apply, in particular with respect to the risk categorisation of the soon-to-be licensed entities. Several industry experts were involved early on in structuring and establishing the processes of the future supervisory organisations, as well as in discussions with FINMA. These new supervisory organisations should therefore be well-equipped to face the challenges which lay ahead.
Trustees active on Swiss soil, meaning both Swiss trustees and foreign trustees with a presence in Switzerland, will benefit from a three-year transition period to comply with the applicable regulatory requirements and submit an authorisation application. If the experience of other professions which have undergone the transition from unregulated to regulated can teach us anything, it is that the process is rarely a smooth one, as it involves not only operational changes, but also a change in mind-set. It is suggested that certain actors will disappear as a result, whilst others will join forces with one another in order to reach a critical size that will allow them to cover their costs.
The adoption of legislative texts is often seen as the end of a long process, but in reality it is just the beginning of the journey. For trustees active in Switzerland, it marks the beginning of their journey as prudentially regulated financial institutions.
Rethinking Museum Governance
What are the legal responsibilities of museum trustees?
Family offices lead the way in engaging new generations
Charles Russell Speechlys advises FairXchange on investment from United Fintech
FairXchange was founded in 2016, to bring clarity and transparency to execution performance through the provision of independent data.
Sarah Jane Boon
Sarah Jane Boon writes for the Financial Times' Your Questions on whether financial claims can be pursued after an ex-spouse's death
Can financial claims be pursued after the death of an ex-spouse?
'Good Divorce Week' - Putting the children first
Trailblazing: how London became the highest ranked European city for private capital property investment
Saying "I don't" - raising the minimum age for marriage
Lisa-Jane Dupernex writes for eprivateclient on the need to review succession planning for French assets
Is it time to review succession planning for French assets following the introduction of a new law in France on 1 November 2021?
The President of the Family Division issues warnings to practitioners
Investing with purpose - What is the goal of a family office?
A family office’s overall strategy and goals should be informed by the family’s investment purposes, ethics and beliefs.
Piers Master and Peter Smith write for eprivateclient on tailoring arbitration for family offices
The advantages of arbitration over litigation as a form of dispute resolution are well-known.
Sarah Anticoni quoted by the Mail Online on the implications of the Marriage and Civil Partnership Bill on child marriage
The government is set to make it illegal to force teenagers to get married using a tough new law.
Matt Foster writes for Family Law on what happens if the person you are divorcing dies during the process
Divorce can feel like a death, but what happens if the person you are divorcing actually passes away?
Alice Martin quoted by FT Adviser on how to advise clients acting under power of attorney
When an attorney starts making decisions on someone’s behalf, how does this affect the advice relationship?
Piers Master and James Broadhurst write for eprivateclient on the goals of a family office
What are the goals, priorities or concerns often raised by families?
Rebecca Burford quoted by Citywealth on family offices’ ESG considerations for their private market investments
Family offices are increasingly deploying a growing portion of their assets to the private markets.
Go easy on each other - divorcing the Adele way
Child abduction: A cautious approach
Matt and Dhara examine the power of the courts to make port alert orders and best practice when dealing with abduction risk cases
Post-pandemic property market
What are the recent trends in the property market as we enter a post-pandemic world?
Impact of expert evidence - ND v GD  EWFC 53
What is the impact of expert evidence in family cases?