According to the Federal Council's timetable, the final versions of the Financial Services Ordinance (FinSO) and the Financial Institutions Ordinance (FinIO) are set to be published at the beginning of November 2019. It is planned that both ordinances enter into force together with the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA) on 1 January 2020.
1. State Secretariat for International Finance (SIF) advocates for extended transitional periods
Although the draft version of the FinSO provides generous transitional periods with regard to the fulfilment of the legal obligations of the FinSA, some financial service providers argued, that the scheduled date of entry into force leaves too little time to fully implement the new requirements. For this reason, the SIF conducted a survey amongst the competent industry associations about the date of the effective entry into force as well as the scheduled transitional periods. Based on the feedback received, the SIF reached the conclusion to recommend the Federal Council to set the entry into force date of both laws for 1 January 2020. At the same time, the SIF requested the Federal Council to implement a two-year instead of a one-year transitional period for certain FinSA code of conduct provisions.
2. Transitional periods according to FinSA at a glance
Given that the Federal Council approves the proposal of the SIF, the following transitional provisions apply:
3. Affected financial service providers and impact in general
The (extended) transitional periods, will apply equally to all financial service providers. In principle, most financial service providers may welcome the solution requested by the SIF. This leaves them with additional time of one year to implement the legal requirements. Irrespective of the extended transitional periods, financial service providers must pay particular attention to meet the FinSA obligations, which will enter into force as of 1 January 2020. For example, the requirements regarding the best execution of client orders as well as the provision of documents will apply already at the beginning of next year.
4. Impact on financial service providers that are subject to CISA in particular
With the entry into force of FinSA, uncertainty remains particularly for existing licensees under the Collective Investment Schemes Act (CISA). The current CISA provisions on distribution and hence on the code of conduct will be deleted without substitution by the introduction of the FinSA (and FinIA) and the revision of CISA itself. In the meantime as of 1 January 2020, licensees under CISA have two years to comply with the code of conduct rules under FinSA. However, despite the resulting "vacuum", it is unlikely that they will not have to comply with some sort of code of conduct. This was also the reason why the Swiss Funds & Asset Management Association (SFAMA) has recommended the SIF to set the entry into force date of the law to 1 January 2021, while shortening the transitional periods regarding the code of conduct provisions.
5. Next steps for financial service providers
In a nutshell, by the end of the year financial service providers should carefully examine, if they still have a need for concrete action, in order to comply with the new legal requirements. Moreover, they must ensure that they meet all legal requirements according to FinSA at the latest by the end of the transitional periods.