Legal basis for recovery and resolution

If an institution supervised by FINMA is at risk of insolvency, FINMA is solely responsible for initiating appropriate insolvency measures. FINMA can take targeted protective measures or initiate restructuring or liquidation proceedings. Appropriate crisis preparation is also required for systemically important institutions. The legal basis can be found in the applicable financial market laws.

In time-critical situations, FINMA’s centralised responsibility for insolvency measures for supervised institutions should enable proceedings to be conducted quickly and taking the circumstances of the individual case into account. In contrast to the Federal Act on Debt Enforcement and Bankruptcy, the financial market laws therefore stipulate sector-specific regulations for measures in the event of insolvency risk. Large, interconnected institutions in particular are also subject to a duty to prepare for crises and, in some cases, increased requirements in order to strengthen their resilience as a preventative measure.

The legal provisions are largely harmonised across the various financial market sectors, but take sector-specific requirements into account. They are based on international standards, such as those drawn up by the Financial Stability Board. This also helps to ensure that government interventions in the event of insolvency are internationally recognised and enforceable.