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LEGISLATIVE DELAYS PUSH SWISS REGULATORY PLAN INTO LIMBO

Chris Hamblin

Compliance Matters

6 November 2013

The first draft of Switzerland’s seismic financial reform legislation was supposed to be published this month, but Compliance Matters has heard that the government has postponed it until January at the earliest.

The Swiss financial services industry is going through a phase of intense self-examination in the same sense that the country’s other great business, the clock-making industry, did in the 1980s with the appearance of digital timepieces. The financial turmoil that began in 2008 (and has never truly ended) is responsible for this latest bout of introspection. Fresh legislation has been planned, although official publicity for the project has been lowkey. In a recent speech covering the whole gamut of Swiss finance and what to do about the ‘ailing’ financial services industry, the CEO of issued a so-called ‘hearing report’ in which it floated some of the ideas that are likely to end up in the final Act. Endless committees and consultations are expected to underlie this massive piece of legislation and only a few steps have been taken towards completion so far.

On 28 March 2013 the FDF announced that it had received about 50 written opinions on the proposals of the previous month and said that it hoped to produce an official draft for consultation in October 2013.

This deadline has now been abandoned in favour of the first quarter of the New Year and many Swiss lawyers are even sceptical about that. It is not expected that the completed Act will enter into force until 2016, by which time the world may have turned once more.

Here is a vague list of suggestions with which the Swiss parliament began earlier this year. Some ambiguities stem from the fact that English is not one of Switzerland’s four official languages.

Firstly, the heavy hand of regulation is to become heavier. The socalled ‘hearing report’ starts by saying that asset managers ought to follow more stringent ‘rules of conduct’ (in British regulation the term is ‘conduct of business’, a term that is linked in to the protection of investors from sharp practice and conflicts of interest). ’s definitive version of its ‘market conduct rules’ came into force on the first of this month, but these are to combat market manipulation and insider-dealing rather than ‘investor detriment.’

There are two ways in which the report envisages progress.