The new FINMA circular 2025/2 on rules of conduct under the Financial Services Act (FinSA) and Financial Services Ordinance (FinSO) which is set to enter into force on 1 January 2025[i] aims to put together a series of uniform standards for the provision of information and support of clients in the financial services sector.

A transitional period until 30 June 2025 is introduced for the implementation of certain requirements.

The circular will essentially be applicable to banks and security firms, managers of collective assets, companies with provision of fund management as well as portfolio management services. Therefore, those financial service providers which are not subject to FINMA supervision would in principle fall outside of the scope of the circular.

In a nutshell, a number of points as follows.

• With regards to the corporate finance exceptions applied by FinSO, the circular clarifies that “buy-side” services, distinguished from “sell-side” services, namely the offering of financial instruments to investors, respectively their sale to clients would fall under the scope of FinSA.
• Duty of service providers to provide information to clients with regards to a) the nature of investment advice as being transaction based, alternatively portfolio based; b) the risks concerning contracts for difference (CFD) and c) the risk concentrations in provision of portfolio management and portfolio based investment advisory services.
• As part of the appropriateness and suitability requirement, service providers must collect information on the knowledge and experience of private clients concerning each investment category on offer.
• Duty of service providers to inform clients of the use of their ‘own’ financial instruments, alternatively those of a third party or a combination of both, in the context of rendering their services, and to ensure appropriate organisational measures in order to avoid potential conflicts of interest as much as possible. In exceptional cases where the conflict of interest becomes unavoidable, service providers are bound by disclosure requirements.
• Duty of service providers to properly disclose third party compensation (retrocession) to clients and to ensure details are highlighted in standardised contracts.
• In cases where service providers may borrow financial instruments from their clients’ portfolios as a counterparty, respectively act as an agent for those transactions, prior and express consent must in general be collected from the clients, in consonance with FinSA. The circular now lists a minimum set of information to be made available to the clients for their consent in this context to be considered valid.

[i] See here https://www.finma.ch/en/news/2024/11/20241121-mm-rs-verhaltenspflichten-fidleg/.