FINMA Circular 2025/2 of November 22, 2024 on the Duties of Conduct for Financial Service Providers

• The circular defines precise guidelines for financial service providers so that they can meet the legal requirements in practice, in accordance with the expectations of supervisory bodies
• The need for sound documentation is emphasized in order to prove compliance with the conduct rules.
• Financial service providers are encouraged to establish clear processes for collecting and reviewing client information. In particular, when creating risk profiles, relevant information must be collected in a structured manner
• With the clarification of the implementation of the conduct rules, which are based on on-site inspections and frequently asked questions from financial service providers to supervisory bodies, FINMA is pursuing two primary goals: 1. to strengthen client protection and 2. to increase transparency in the industry

Portfolio-related advice requires a comprehensive suitability assessment (FIDLEG, Art. 12). The following must be checked:

• 1. • Clients' financial circumstances and investment objectives
     • Clients' knowledge and experience related to financial services provided, not to individual transactions.
  2. When providing risk disclosure about contracts for difference (CFD), the financial service provider must provide the client with precise information.
  3. The financial service provider provides information on the nature and extent of concentration risks (market-unusual concentrations) (>10% in individual stocks; >20% in individual issuers) in client portfolios for asset management and portfolio-related investment advice.

(Art. 8 Para. 2 Letter B and C; iVm Art. 25 FIDLEG, Art. 9–10 and 24–28 FIDLEV)

The transitional period for certain requirements of the FINMA Circular ends on June 30, 2025. However, most regulations will already come into force on January 1, 2025.

Don't waste any time and start immediately with the review and adaptation of your internal processes and documentation to meet the new regulatory requirements.

AvelaLaw specializes in legal, compliance and risk management in asset management. We are at your side to implement the new requirements efficiently and comprehensively. We offer you:

• Gap analysis: Identification and closing of regulatory gaps in existing processes.
• Adaptation of documents and contracts: Revision of client information documents, contracts and internal instructions.
• Process optimization: Development and implementation of practical processes for information obligations, conflicts of interest and retrocessions.
• Training courses: Sensitizing your team to the new conduct rules and their application in practice.
• Continuous advice: Support during the entire adaptation phase and regular review of the implementation.

Together we ensure that you are well prepared. Sign up!