Is your code of conduct FinSA-proof?

Dr. Günther Dobrauz Partner and Leader Legal, PwC Switzerland 26 Feb 2019

Under the Financial Services Act (FinSA), client advisors must know the FinSA Code of Conduct and display the ability to perform competently. To ensure that this is the case, PwC has devised a test that has become the new benchmark for financial service providers.

The Code of Conduct is the Holy Grail

The Financial Services Act (FinSA) and Financial Institutions Act (FinIA) are part of the new financial market architecture. Both acts will create uniform competitive conditions for financial intermediaries and improve client protection. They were enacted by the Swiss Parliament in June 2018 and will come into effect on 1 January 2020.

Under the current financial services law, there are significant shortcomings in the areas of code of conduct and product regulations with financial service providers being subject to different degrees of regulation and supervision. In the asset management business, for instance, some providers are subject to prudential supervision (banks, securities dealers, fund management companies and asset managers of collective investment schemes), while other financial service providers are not subject to supervision at all (independent asset managers). These deficiencies in current law have led to insufficient client protection and an unequal competitive environment.

The FinSA encompasses rules for offering financial services and distributing financial instruments as well as a Code of Conduct to which financial service providers must adhere in their interactions with clients. It also makes provision for prospectus duties and requires an easily understandable key information document for financial instruments. Under the new law, financial service providers are required to give clients appropriate explanations and advice. In addition to that, all financial service providers will now have to affiliate to an existing or newly created ombudsman.

PwC’s benchmark test X-rays client advisor competence

The new financial market regulation also states that client advisors e.g. from foreign banks and non-FINMA supervised financial institutions must be entered into the client register. The obligation that client advisors must profess adequate knowledge of the Code of Conduct and the necessary expertise to act, however, applies to all client advisors employed by financial institutions supervised directly by the Swiss Financial Market Supervisory Authority (FINMA).

As financial services providers must prepare to comply with the new laws, PwC has created a cost-efficient test that allows them to assess the degree of client advisors’ knowledge of the Code of Conduct as well as their expertise that is required to competently perform their activities under the FinSA. The test consists of several parts. They work on a stand-alone or an aggregate basis and last between 45 and 180 minutes each. The different parts include sets of questions concerning the Code of Conduct and General Capability as well as Asset Management and Advisory and Investment and Corporate Banking.

PwC’s straightforward test is the most cost-efficient solution available to check client advisors‘ knowledge of the Code of Conduct rules under the FinSA and their capability to perform their duties. It has therefore quickly become the new benchmark for financial service providers. Client advisors who succeed in the test receive a certificate as proof of their competence.

The test can be taken online, on a global scale and on demand. It can be used in examinations of external asset managers, in HR processes – e.g. to test the capabilities of job candidates – or in tests of counterparties. The test can be used to check on a periodic basis, whether client advisors are still up to their duties or whether there might be room for improvement. The test will of course be updated on a regular basis, it can thus be used as a recurring testing tool.

Check your FinSA readiness

The Financial Services Act (FinSA) states that client advisors must be entered in the client register and that they must have adequate knowledge of the Code of Conduct set out by the FinSA and the necessary expertise to perform their activities. PwC has developed a comprehensive and cost-efficient test so that  you can check your and your client advisor’s FinSA readiness. PwC’s cost-efficient benchmark test includes:

  • Knowledge and capability check to ensure client advisor readiness
  • Due diligence of HR processes, external asset managers and other counterparties
  • Topic-specific test parts
  • Further education and regular updates
  • Global digital access
  • Certificate upon successful completion

Learn more about PwC’s FinSA Code of Conduct test