Information for clients relating to the Swiss Federal Act on Financial Services (Financial Services Act, FinSA)
1. Purpose and subject matter of FinSA
FinSA and the Ordinance on Financial Services (Financial Services Ordinance, FinSO) came into force on 1 January 2020. These two pieces of legislation seek to protect investors and other clients of financial service providers and to establish comparable conditions for the provision of financial services by financial service providers, and thus contribute to enhancing the reputation and competitiveness of Switzerland’s financial centre. The Bank has until December 2021 to apply the code of conduct and comply with the new obligations.
2. Information on the Bank as financial service provider
- The Bank’s address is: Rue Merle d’Aubigné 16, 1207 Geneva
- Telephone: +41 58 225 50 00
- The Bank has a banking licence granted by the Swiss Financial Market Supervisory Authority (“FINMA”) (https://www.finma.ch/fr/) and is regulated by this Authority.
3. Client segmentation
To determine the appropriate level of protection, FinSA requires the Bank to assign investors to one of the following segments:
- retail clients,
- professional clients,
- institutional clients.
The retail client segment is the one that provides the highest level of protection. FinSA requires the Bank to provide clients assigned to this segment with detailed information before providing any financial service.
However, FinSA allows a retail client to declare that he wishes to be treated as a professional client, provided he does so in writing and satisfies certain criteria.
A high-net-worth retail client may request to be treated as a professional client in the following cases:
- Has at his disposal assets of at least CHF 500,000; and
- On the basis of his personal training, education and professional experience or on the basis of comparable experience in the financial sector, possesses the necessary knowledge to
- understand the risks associated with investments.
- Has at his disposal assets of at least CHF 2 million, excluding assets such as property, claims against social security organisations and occupational benefits.
High-net-worth retail clients may opt out (change of segment) and ask to be treated as professional clients (art. 5 para. 1 FinSO). This reflects the principle contained in the Collective Investment Schemes Act. According to the Federal Council’s Message relating to FinSA (p. 8149), the service provider must indicate to clients that they are bound to inform it of any changes; if this happens, the provider must check whether the clients can still be deemed to be professional clients. In addition, some clients may declare that they wish to be treated as institutional clients. Professional clients that are not institutional clients may opt in, i.e. declare that they wish to be treated as retail clients. Finally, institutional clients may declare that they wish to be treated as professional clients (art. 5 paragraphs 5 and 6 FinSA)
4. Types of financial services offered
- Clients may place orders for the acquisition or disposal of financial instruments, either with their adviser or through the E-Banking platform. Such stock exchange transactions executed through the E-Banking platform or transactions entered into without advice are deemed to be execution-only transactions. No suitability or appropriateness assessment is performed for execution-only transactions. The Bank provides no advice for execution-only transactions and the client assumes all the risks they entail. Where solely providing execution-only services, the Bank must ensure in the execution of the client’s orders that the best possible outcome is achieved in terms of cost, timing and quality.
- The Bank carries on a portfolio management activity. As such, it assesses the suitability of the financial service provided based on the client’s financial situation (i.e. the origin and amount of regular income; assets; and current and future financial commitments) and investment objectives (i.e. the time horizon and purpose of the investment; risk capacity and appetite; and any investment restrictions), and assesses the appropriateness of the financial service provided based on the client’s knowledge and experience.
- As part of its activities, the Bank assists the client and, at his specific request, in his investment decisions by providing him with a list of investment recommendations for individual investment products (for example high-quality shares and bonds) that correspond to the investment strategy chosen by the client. The Bank may also provide the client with additional information upon request. It is therefore up to the client to obtain the desired service and decide to follow it. Once this investment decision has been taken, the client acknowledges that the Bank is not required to monitor his investments or to make him aware of potential risks or negative performance. If the client chooses an investment that involves more risk than the investment strategy he initially selected based on the risk profile, he takes note and accepts that he may incur losses beyond his risk capacity and tolerance. In addition, if the client chooses an investment strategy that involves less risk than the investment strategy initially chosen, the client notes and accepts that he will probably not achieve his investment objectives and expected returns.
Clients’ main rights and obligations
- The client is bound to pay the agreed charges.
- The Bank must execute clients’ orders in accordance with the principles of good faith, equal treatment and execution, and must ensure that the best possible outcome is achieved in terms of cost, timing and quality.
- The rights and obligations mentioned above are not exhaustive.
- The Bank is not required to monitor the performance of execution-only transactions or to make clients aware of any risks they entail or price falls.
- In the event of a conflict with the Bank, the client may contact the Swiss Banking Ombudsman after contacting the Bank and prior to any legal action. The Ombudsman will examine, free of charge or at minimal cost, any grievance that the client may have against the Bank. The Ombudsman may conduct and communicate to the parties a neutral assessment of the dispute.
5. Risk information
The Bank informs its clients of the risks associated with financial instruments. The Swiss Bankers Association’s “Risks Involved in Trading Financial Instruments” brochure is made available by the adviser when providing the service in question and at any time upon request. This information is also available on the Swiss Bankers Association’s website at https://www.swissbanking.ch/Resources/Persistent/c/8/4/0/c840d1f03cf558c4a0dddcc9f94cb8e5c984125e/SBA_Risks_Involved_in_Trading_Financial_Instruments_2019_EN.pdf
6. Information on charges and fees
In consideration of the financial services provided by the Bank, charges and fees are billed to the clients. These charges and fees are detailed in the Bank’s charges and fees guide.
On request, this document can be obtained from your adviser.
7. Information on services and retrocession fees received by third parties
The client agrees that the Bank may receive payments or other benefits, directly or indirectly, from third parties (in particular in the form of commission, distribution indemnities or other payments), as well as any retrocession fees, in connection with the acquisition, holding or sale of clients’ investments (hereinafter the “third-party payments”).
Clients agree that such third-party payments shall be considered by the Bank as additional remuneration in addition to the remuneration agreed with the Clients. The value ranges for third-party payments received by the Bank are set out in the brochure “Transaction fees and charges”. At the client’s request, the Bank shall make all reasonable efforts to inform him of any payments or other remuneration received from third parties that can be unequivocally attributed to the individual client relationship. Clients’ requests must be made within one year of receipt by the Bank of the payment in question, failing this, they will be deemed to have been made late.
In general, the Bank undertakes, by taking appropriate measures, in particular in terms of organisation, either to avoid conflicts of interest between itself and its clients or between its employees and clients, or to prevent, if a conflict of interest cannot be avoided, any discrimination of its clients that may result therefrom.