FINMA is committed to fulfilling its supervisory responsibilities by ensuring the protection of creditors, investors and policyholders and making certain that the financial markets can continue to function properly. In its supervisory activities, FINMA also focuses on identifying risks which could affect individual institutions or the entire financial system.
Objectives of prudential supervision
FINMA’s forward-looking, prudential supervision has three main objectives:
- All supervised institutions should be financially stable and have sufficient equity capital to bear losses in the event of a crisis.
- Key market risks should be identified so that they may be avoided where possible.
- Supervised institutions which become insolvent or go bankrupt despite these efforts should exit the market in an orderly manner without inflicting damage on clients or the economy.
FINMA deliberately undertakes more intensive supervision in those areas which are central to the proper functioning of the financial system. Financial market legislation also defines the intensity of supervision and supervisory tasks that apply in different cases.
What FINMA is vigilant about
Specifically, FINMA is responsible for ensuring that supervised institutions comply with financial market laws, ordinances and circulars. FINMA’s ongoing supervisory activity focuses primarily on making certain that supervised institutions
- hold sufficient equity capital
- have sufficient liquidity
- have a good risk management policy
- structure their internal organisation appropriately, and
- maintain harmonised control systems.
FINMA also continuously monitors compliance with money laundering regulations and other business conduct rules.
FINMA’s role in supervision
What FINMA does
- FINMA ensures that supervised institutions comply with financial market laws, ordinances and circulars.
- FINMA ensures that supervised institutions permanently satisfy the licence conditions.
- FINMA performs on-site supervisory reviews.
- FINMA supervises quantitative aspects such as capital resources and solvency, and qualitative factors such as the corporate governance and risk management of prudentially supervised institutions.
- FINMA supervises branches of foreign financial institutions.
- FINMA monitors compliance with due diligence requirements in respect of combating money laundering.
- FINMA is the supervisory authority for the disclosure of shareholdings in all listed companies.
- FINMA supervises public takeover offers.
- FINMA maintains regular contact with foreign supervisory authorities.
- FINMA cooperates with other authorities, both nationally and internationally, and responds to their requests for assistance.
- FINMA supervises portfolio managers and trustees via a supervisory organisation.
- FINMA is responsible for approving the client advisors’ registration body as defined in FinSA and the reviewing body for prospectuses.
What FINMA does not do
- FINMA does not perform ongoing, prudential (comprehensive) supervision of fund distributors.
- FINMA does not supervise pension funds.
- FINMA does not perform ongoing supervision of insurance intermediaries.
- FINMA does not supervise compulsory health insurers.