Self-regulation in Switzerland: what does it actually mean

When it comes to regulating the financial markets, Switzerland has one strong feature that sets it apart from other countries. This is self-regulation, also known as autoregulation. This concept is well-defined  and  governed by the Swiss law as it can take several forms. We explain the essential things to know about self-regulation.

Self-regulation: definition

Self-regulation is the term used to describe all the measures that supplement regulatory texts in order to regulate the banking and financial sector. It is therefore part of the thousands of pages of Swiss financial regulations. The term autoregulation is often used as a synonym.

The sources of self-regulation are diverse. They are based on market practice and the collaboration of industry experts. They are drawn up by  professional associations  and industry participants subject to them.

The provisions laid down by self-regulation are updated or adapted rapidly to keep pace with market trends and requirements. This means that a common regulatory framework for the industry can be established quickly (as it was the case, for example, with the SBA’s ESG guidelines). The self-regulation process is generally faster than the legislative process undergone when the Confederation prepares a new text.

What does FINMA say about self-regulation?

Article 7 of the Federal Act on the Swiss Financial Market Supervisory Authority (FINMASA) lays down the principles of Swiss regulation, i.e. ordinances and circulars. It also states that “FINMA supports self-regulation. It may recognise it as a minimum standard and transpose it into its supervisory rules”.

What types of self-regulation exist in Switzerland?

There are three categories of self-regulation, two of which are supervised by FINMA:

    • The free self-regulation remains purely private, with no need for the State to interfere in its operation.
    • The minimum standard self-regulation is recognised by FINMA, as the Authority transposes it into its own rules for supervision of the financial sector. This type of self-regulation is recognised by FINMA’s Board of Directors, sometimes following a public consultation.
    • Mandatory self-regulation refers to provisions that are required by law to be regulated in this way. Examples include the Money Laundering Act and the Banking Act. In these cases, self-regulation is subject to approval by FINMA.

What are the traditional sources of self-regulation for banks in Switzerland?

Here are a few examples of authorities involved in banking self-regulation:

  • the Swiss Bankers Association (SBA) ;
  • AMAS, the Asset Management Association Switzerland ;
    etc.

What is a self-regulatory organisation (SRO)?

SRO stands for self-regulatory organisation. SROs were created with the entry into force of LEFin and the new obligations for financial institutions under LEFin. At the end of 2023, 11 entities in Switzerland were recognised as SROs. The SROs themselves supervise the organisations and intermediaries affiliated to them. These self-regulatory bodies are responsible for ensuring that not only legal obligations but also professional standards are effectively applied.

How does FINMA supervise the SROs?

The Swiss Financial Market Supervisory Authority (FINMA) is responsible for authorizing SROs and supervising them. It ensures that the self-regulatory organisations comply with their obligations. FINMA approves the regulations to be followed by the SROs, as well as any amendments or revisions to them. It may carry out or mandate audits of the SROs and decide to withdraw their authorization without prior notice. SROs must inform FINMA of any changes made to their organisation.

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