FinIA and FinSA: Game Changer for Swiss Trustees

Switzerland's trust industry remained largely unregulated for decades — apart from standard anti-money laundering regulations. This has fundamentally changed with the Financial Institutions Act (FinIA) and Financial Services Act (FinSA). An article by Sandrine Giroud and Matthias Gstoehl (LALIVE, Geneva/Zurich) in the STEP Journal analyses the consequences.

New Supervision for Trustees#

Trustees operating in Switzerland are now subject to supervision by FINMA. The key requirements:

• Licensing obligation: Trustees need authorisation to carry out their activities
• Minimum capital: CHF 100,000 paid-in capital or professional liability insurance
• Organisation: At least two qualified persons in management
• Audit obligation: Annual auditing (with possible extension to four years)
• Swiss domicile: Effective place of management must be in Switzerland

The Retrocession Dimension#

The article highlights a particularly critical point: trustees have a statutory duty to claim back kickbacks and retrocessions from banks and asset managers.

The Swiss Supreme Court ruled in 2012 that retrocessions must be returned to the principal absent a valid waiver. In 2017, it confirmed a ten-year limitation period for such claims.

For trustees, this means: failing to pursue these claims exposes them to potential damage claims and criminal sanctions. With the tightened regulation under FinIA and FinSA, the pressure to act proactively has increased significantly.

Growing Liability Risks#

The combination of new regulation and established Supreme Court jurisprudence on retrocessions creates an expanding liability risk:

1. Civil liability: Trustees who fail to claim retrocessions can be sued by beneficiaries for damages
2. Criminal liability: Non-disclosure can constitute the offence of unfaithful management (Art. 158 Swiss Criminal Code)
3. Regulatory liability: FINMA can intervene in cases of breach of duty of care

Action Required for Trustees and Investors#

Trustees should review their existing mandates for unclaimed retrocession claims. Investors with trust structures in Switzerland should raise this point with their trustees.

LegaFund supports both trustees and investors in enforcing retrocession claims — at no cost risk under the non-recourse model.

Download the full STEP Journal article as PDF →

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Source: Sandrine Giroud & Matthias Gstoehl, "Game changer for Swiss trustees", STEP Journal, December 2017/January 2018.