A new accountability regime and duty of care for Swiss banks

I. What is the background of the proposed law?

The measures respond to the Credit Suisse crisis of March 2023. On 6 June 2025 the Federal Council set out the key parameters for the legislative work, which includes strengthening corporate governance at Swiss banks. Its draft Banking Act now suggests how to implement those key parameters at statute level.

II. What has changed since the presentation of the key parameters on 6 June 2025?

According to the report, dated 6 June 2025, the accountability regime was supposed to apply to all banks. After a survey among banks, it became clear that smaller institutions would be burdened disproportionately. Thus, the regime is now limited to complex banks. The duty of care, by contrast, was kept broad. It applies to Senior Managers at all banks, not only to those subject to the accountability regime.

III. What are the components of the accountability framework?

The accountability regime applies to banks with a complex organisation, planned to be defined as banks with 250 or more full-time equivalents at ordinance level. Banks whose headcount fluctuates around 250 full-time equivalents only need to comply once it is established that the threshold will be exceeded permanently. Most Swiss banks are below this threshold and will thus not be affected by the accountability regime.

The full-time equivalents are however not the only trigger. FINMA may apply the accountability regime to further banks to remedy governance problems, for example if key functions are not clearly allocated.

The accountability framework includes the following components:

A) Scope of Persons (Senior Managers)

Today, members of the board and the management must guarantee proper business conduct and always qualify as Senior Managers. In addition, persons without such a formal corporate body status but with responsibilities which could put the continued existence of the bank at risk may face the same requirements and qualify as Senior Managers.

The proposed rules include a more detailed definition of Senior Managers for banks with a complex organisation. Besides members of the board and the management, the heads of internal audit, risk control, compliance, operations, finance, information and communication technology, material business units, and other central functions, are Senior Managers. The proposed rules assume that these persons exercise significant influence over management, risks, or the internal control system.

A business unit will qualify as material if it contributes at least 10 per cent of the bank's gross revenue. Further central functions are institution-specific and may include treasury, interim functions created after a merger or for a core banking system replacement, and risk-relevant business units below the 10 per cent threshold.

B) FINMA Approval

Banks must obtain FINMA approval prior to the definitive appointment of a Senior Manager. This is already the case today for persons that must guarantee proper business conduct.

C) Documentation Obligations

Banks with a complex organisation must ensure that relevant responsibilities are clearly identified and allocated to a Senior Manager. They must maintain an overview of the areas and functions, including the responsible Senior Manager and his/her tasks. The starting point for this responsibility overview is the bank's existing organisational chart. In addition, every Senior Manager must sign a responsibility statement confirming their responsibility for their tasks within their area or function. The key positions of the bank must generally be allocated to members of the executive management or the head internal audit. Specific responsibilities must also be allocated to the board members.

IV. What does the duty of care encompass?

Senior Managers at all banks must perform their tasks with all due care. Those persons must behave as can reasonably be expected of a properly acting person in a comparable position. In other words, the behaviour of a Senior Manager is benchmarked against a properly acting fictional peer. The duty of care encompasses all tasks alloc3ated to the Senior Manager under the accountability regime.

They must ensure within their area of responsibility compliance with:

In practice, this means taking organisational precautions, monitoring compliance with these measures, informing staff about their duties, establishing effective internal controls, acting quickly in case of breaches, and being familiar with Swiss regulation impacting the Senior Manager’s area of responsibility.

The bank must impose sanctions on Senior Managers breaching their duty of care. Sanctions may take the form of disciplinary measures or reducing the variable remuneration and must be set out in the bank’s internal rules. In addition, FINMA may apply supervisory instruments according to the Financial Market Supervision Act in cases of serious breaches of the duty of care. These instruments may impact the Senior Manager or the bank. 

V. Remuneration

Today, key rules around remuneration for banks are set out in the FINMA Circular on Remuneration Schemes (2010/1). The draft act suggests enshrining remuneration requirements directly in the law. Minimum principles apply to all banks and must be adhered to when designing compensation frameworks. The principles are the following:

As a guideline, the long-term economic success should be measured over a period of five years. Where business performance is poor, variable remuneration must be substantially reduced or forfeited. Banks must also provide rules under which breaches of applicable law or internal rules lead to a reduction or forfeiture of variable remuneration.

For systemically important banks (SIBs), the proposed requirements are stricter. The variable compensation of Senior Managers and individuals with high total compensation must be partially deferred and may be reduced or forfeited (malus). In addition, SIBs must provide for an option to recover variable remuneration already paid out in case of misconduct (clawback). The definition of a person with high total compensation will have to be established on ordinance level.

VI. Outlook

Considering the regulation in other jurisdictions, the overall direction of the new Swiss regime is not surprising. However, many details need to be specified at the ordinance level. Also, the draft act will be changed in the legislative process. Regardless of the details in the ordinance and potential changes to the draft act, institutions can start reflecting on the broad direction of the new regime, like the proper allocation and documentation of responsibilities and the design of incentive structures, namely the remuneration system. If not for the upcoming regulatory regime, the exercise would still improve the institution’s corporate governance.