Switzerland is known for its strong financial system, but somebody needs to ensure that banks, insurers, and investment firms play by the rules. This is where FINMA comes in.
The Swiss Financial Market Supervisory Authority (FINMA) is the regulator responsible for overseeing banks, insurance companies, asset managers, and financial intermediaries.
Its main role is to ensure stability, transparency, and consumer protection in Switzerland’s financial sector.
Why does FINMA matter?
For anyone investing, banking, or managing finances in Switzerland, FINMA’s regulations provide a trusted framework that keeps the system running smoothly, and tries to keep untrustworthy entities out of the financial system.
FINMA also plays a crucial role in crisis management, stepping in when financial institutions face difficulties that could threaten Switzerland’s economic stability. By enforcing capital requirements, conducting risk assessments, and intervening when necessary, it helps prevent bank failures and protects consumers from financial loss.
For a real world example, in March 2023 FINMA approved the emergency takeover of Credit Suisse by UBS to prevent a potential financial crisis. This decision was made in collaboration with the Swiss Confederation and the Swiss National Bank, aiming to ensure stability for the banks' customers and the financial centre. FINMA has also mandated UBS to enhance its emergency and recovery plans to address the increased risks resulting from the acquisition.
You can read more about their approval of the Credit Suisse takeover by UBS on the FINMA website here: https://www.finma.ch/en/news/2023/03/20230319-mm-cs-ubs
Beyond regulation, FINMA ensures that Switzerland remains competitive in global finance by aligning its policies with international standards. It collaborates with global regulatory bodies to uphold best practices while maintaining the country’s unique financial strengths, such as its strong banking privacy laws and investor-friendly policies.