Compliance

Swiss Parliament Approves New Financial Sector Regulator

Bob Reynolds, 18 June 2007

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The Swiss Parliament has approved the merger of three bodies in a unified financial sector regulator. The federal Financial Market Supervisory Authority (Finma) will be delayed for a year and has been criticised for lacking full autonomy from government.

Finma will group together the regulatory work of the Federal Banking Commission, the Federal Office of Private Insurance and the Money Laundering Control Authority at the beginning of 2009, following years of political wrangling.

The International Monetary Fund broadly welcomed the plans this month but voiced criticism that the Swiss finance ministry will retain full powers to impose financial penalties, fearing this may compromise Finma's independence.

Professor Hans Geiger of Zurich University's Swiss Banking Institute said it was important to separate the powers of investigation and punishment. "There is legal argument that the supervisor should not also act as the judge, so this separation of functions is absolutely necessary."

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