ISFB Insight
What are the main regulatory developments for banks at the start of 2024?
Keeping abreast of changes in banking regulations, and implementing them, are essential to ensuring that our business remains above reproach. These changes also often involve training and/or the study of new fields.
Regulatory news for Swiss banks since the start of the year has two main sections: the important regulations that came into force with the new year, and the various announcements of changes to come:
- On January 1, 2024, the FINMA circular "Operational Risks and Resilience - Banking" came into force and, in many cases, required one or more regulatory projects to adapt the internal framework. Without going into the details of the circular, which has been the subject of much comment, the management of critical data and operational resilience have kept the teams concerned busy, and will continue to do so.
- The SBA's Guidelines for Financial Service Providers on the integration of ESG preferences and ESG risks in investment advice and asset management formally came into force on January 1, 2024, and must be implemented for new clients (including obtaining and documenting the client's ESG preferences). In addition, the transitional period that applied to the initial and ongoing training requirements for client advisors is also coming to an end, so that the training requirements of art. 15 are now fully in force.
- Also at the beginning of the year, the transitional period for the SBA's Guidelines for Mortgage Providers on Improving the Energy Efficiency of Buildings came to an end. The requirements of this SBA Guideline, which apply to advice given to private individuals with a view to financing a single-family home or vacation home for own use, are now all in force, and also provide for initial and further training for certain employees (those providing advice to private individuals with a view to financing a single-family home or vacation home for own use).
The main announcements of upcoming changes since the beginning of the year are :
- Consultation begins on a new FINMA circular on nature-related financial risks. These risks correspond to "the risk of direct or indirect financial loss or any other negative consequences for the institution in the short, medium and long term resulting from its exposure to nature-related risks". (cm 7) The hearing will last until March 31, and the circular is scheduled to come into force on January 1, 2025.
- On January 31, the Swiss Federal Council announced that the new L-QIF fund category would come into effect on March 1, 2024. The corresponding amendments to the CISO have also been published. The L-QIF will be reserved exclusively for qualified investors. The L-QIF is the Swiss answer to enabling the creation of funds not subject to regulation: the fund will not be subject to FINMA supervision and will not require authorization, but it will have to be administered by institutions subject to FINMA supervision.
This brief overview sums up the situation at the beginning of February 2024. Banking regulations will continue to evolve, as the economic, technological and social environment continues to change.
Enrico Giacoletto, CFA, FRM
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