Scope of various code of conduct rules
a. FinSA Code of Conduct
FinSA establishes a Code of Conduct and rules of behavior applicable to all financial service providers including client advisers, producers and providers of financial instruments. As per FinIA, these actors need to be authorized to perform their services in Switzerland.
These rules vary according to the financial service offered (portfolio management, investment advice, order execution) and the classification of the client. Financial service providers, including (where applicable) asset managers, had until December 31, 2021 to comply with the following obligations:
- Duty to provide information: provide sufficient information on the financial service providers itself, financial instruments, the risks and costs associated, or also make available the appropriate documentation to investors
- Appropriateness and suitability of financial services: when investment advice or portfolio management services are provided, financial services providers shall perform an appropriateness or suitability review
- Documentation and rendering account: document and render account to client in an appropriate manner
- Transparency and care in client orders: principles of good faith, equal treatment and best execution when handling client orders must be respected
b. AMAS Code of Conduct
The AMAS Code of Conduct (applicable since 1st January 2022) contains detailed rules of conduct based on Art. 20 CISA and is applicable to fund management companies, managers of collective asset, representatives of foreign collective investment schemes, persons exempt from the duty to obtain authorizations and agents (“Fund Institutions”). It applies irrespective of whether or not a given financial institution is a "financial services provider" under FinSA.
In practice, the new Code of Conduct will be indirectly imposed on foreign institutions, e.g. to foreign funds by their Swiss representatives. Indeed, as it is fully applicable to the Swiss representative, it is applicable by extension to the foreign management company that distributes its funds in Switzerland through this representative.
Article 20 CISA establishes following obligations on the asset managers:
- Duty of loyalty: implies acting independently and exclusively in the interests of the investors
- Due diligence: means implementing organizational measures that are necessary for irreproachable business conduct
- Duty of information: requires rendering account of the collective investment schemes which they manage and represent
Organizational measures
a. FinSA
As per FinSA, financial services providers must put in place appropriate organizational measures with regard to: