The introduction of the new regime, which is subject to consultation, follows a regulatory investigation into the sale of capital protected products.
The investigation was triggered by the 2008 collapse of investment bank Lehman Brothers, which had provided the guarantees on many structured products sold in Switzerland, and globally.
FINMA said it found the law did not provide adequate consumer protection in a number of areas, including around costs and charges and explanation of risk.
Among the provisions there is also a requirement for stricter regulation of cross-border sales, which are largely unregulated currently. The others are as follows
• Comprehensible description of the risks associated with financial products
• Rules of business conduct in client contact at the point of sale
• Improved documentation requirements at the point of sale
• Simpler product rules and rules of conduct for business with qualified clients
• Registration requirement for not prudentially supervised financial services providers at the point of sale
• Binding, simple and fast settlement of disputes with retail clients
FINMA has proposed the passage of a Financial Services Act to enshrine these rules into law, as well as a ‘Federal Council ordinance’, which it said would bring into effect the same rules but more quickly than the legislative process, which it noted could take a number of years.
Those who wish to comment on the proposals have until April 2011.
