The Swiss Financial Market Supervisory Authority (Finma) is bringing the circular on the duties of conduct unter the Financial Services (FinSA) into force on January 1.

The letter aims to clarify supervisory practices and ensure clients receive the necessary information to make sound investment decisions, according to a press release issued on Friday.

Information on Risks and Conflicts of Interest

The circular sets out, for example, how information is provided on the type of financial service, the associated risks and the compensation of third parties. It also addresses how to deal with conflicts of interest when using the bank's own financial instruments.

The circular serves to clarify practical issues and to specify the duties of conduct under FinSA. It was «intensively discussed» by various interest groups in a hearing. As a result, various points were included and implemented in the circular.

Opposition from Banks and Industry Associations

According to Finma, it was welcomed by consumer protection organizations, some law firms, supervisory organizations, universities and other interested parties. However, banks, industry associations and other industry-related organizations and companies have generally called for a circular to be dispensed with, it continues.

For example, the Swiss Bankers Association (SBA) argued in summer that the circular should be dispensed with completely. The need for regulation would not be apparent. In parts, it would have a «legislative character» and sometimes even contradicts the express will of the legislator. Finma would not be called upon to do either.

Unnecessary and Potentially Contentious

«The civil law relationship between customer and bank is subject to assessment by the ordinary courts. We consider the attempt to subject this area to public law by means of a circular to be unnecessary and potentially controversial,» it says.