Switzerland’s Financial Market Supervisory Authority (FINMA) has recently shared insights regarding the licenses granted to portfolio managers and trustees under the Financial Institutions Act (FinIA). Since the regulation came into force in 2020, entities engaged in commercial portfolio management and trustee activities have needed to acquire a license to operate legally. Although a transitional phase of three years was established, which allowed existing entities to adapt, the process to secure these licenses has encountered various challenges.
As of February 2025, FINMA indicated that it had processed over 94% of the 1,699 applications submitted by the end of 2022. However, it was noted that a significant number of applications were submitted towards the end of the transitional period, accounting for about half of the total submissions. This influx of late applications negatively affected their overall quality, leading to delays in the approval process. In fact, in over 40% of the cases, FINMA required multiple revisions from applicants before granting approval.
Out of the total applications, 1,532 have received approval since the licensing requirement came into effect. Specifically, 1,428 licenses were granted to firms that applied before the end of the transitional period, and an additional 104 licenses were issued to those who applied in early 2023. However, approximately 8% of these applications were withdrawn by the institutions themselves during the review stages.
In addition to the licensing process, licensed entities have initiated a variety of changes that necessitated prior approval from FINMA. The authority has already received a total of 3,221 requests for such changes and anticipates an annual influx of roughly 1,700 requests moving forward.
The supervisory framework established by the FinIA is a two-tier system that allows for continuous oversight and auditing of portfolio managers and trustees. This ongoing supervision is primarily conducted by supervisory organizations (SOs), which are also overseen by FINMA. In instances where the SO identifies potential issues that they cannot resolve, they escalate these matters to FINMA for further action to ensure compliance with regulatory standards.
In the latter part of 2024, there was a notable increase in cases transferred from SOs to FINMA for preliminary investigations, as well as a rise in the number of institutions under tighter scrutiny. This reflects an increased vigilance in regulatory oversight as FINMA works to uphold market integrity and protect the interests of investors and stakeholders.
Overall, the transition to compliance with the FinIA is a significant regulatory development in Switzerland’s financial landscape, and FINMA’s efforts to oversee and facilitate the licensing process for portfolio managers and trustees are essential in maintaining a robust financial system.