FinSA

Federal Act on Financial Services (FinSA)

1.  General information: objectives of the law

The Federal Act on Financial Services entered into force on January 1, 2020 and it aims to:
•  strengthen the protection of investors;
•  define rules of conduct regarding the offering of financial instruments and the provision of financial services
•  create a level playing field among financial services providers.

2. Scope of application and identification of the financial services provider

The FinSA applies to all financial services providers (“FSPs”) operating in a professional capacity, which includes banks and issuers and suppliers of financial instruments in Switzerland. Most of FinSA’s provisions benefit from a transitional period until January 1, 2022.
In this context, CBH Compagnie Bancaire Helvétique SA (“CBH” or “the Bank”) is subject to the FinSA. The address of the Bank’s registered office is:

CBH Compagnie Bancaire Helvétique SA
Boulevard Emile-Jaques-Dalcroze 7
1204 Geneva

CBH is duly licensed as a bank and securities house and is subject to the supervision of the Swiss Financial Market Supervisory Authority (FINMA – Laupenstrasse 27, 3003 Bern). In addition, CBH is a member of the Swiss Bankers Association and the Swiss Deposit Guarantee Association for Banks and Securities Dealers.

CBH is an independent, family-owned private bank, and focuses on asset management for private and institutional clients. CBH therefore offers wealth and asset management services as well as Family Office solutions.

The FinSA thus applies to CBH since it provides the following financial services:
•  the purchase or sale of financial instruments,
•  the receipt and transmission of orders for financial instruments,
•  asset management,
•  investment advice,
•  granting credit for transactions in financial instruments.

3. Client classification

The Bank collects personal data for the purposes and on the legal basis hereafter, in accordance with the applicable data protection regulations:

The FinSA provides for the obligation for the institutions subject to it to classify their clients in one of the following three categories: “private” clients, “professional” clients, “institutional” clients.

Classification

Signification

“Private” clients

• Clients who are neither professional nor institutional
• Benefit from the most important and extensive protection
• Detailed information for private clients
• Access limited to only certain financial services and instruments
• Not considered as “qualified investors” under the Swiss Federal Act on Collective Investment Schemes (CISA); however, the signing of a management or advisory mandate in favor of the Bank automatically gives the status of qualified investor

“Professional” clients

• Deemed to be able to make informed investment decisions
• Assess the risks and scope of their investments based on their knowledge and experience
• Can financially bear the risks and consequences of their investment decisions
• Limited protection
• Considered as “qualified investors” under the Swiss Federal Act on Collective Investment Schemes (CISA)

“Institutional" clients

• Have knowledge and experience comparable to that of financial services providers
• No application of the provisions on rules of conduct set out in the FinSA
• Include among others central banks, insurance companies and all financial intermediaries subject to prudential supervision, in Switzerland or abroad
• Considered as “qualified investors” under the Swiss Federal Act on Collective Investment Schemes (CISA)

Clients are automatically classified in one of these 3 categories of clients, by legal obligation, but they can request a change of classification (Opting-in/Opting-out, see next point 4):

Private clients

Professional clients

Institutional clients

Non-professional or non-institutional clients, including professional clients who have opted in

• Public law institutions with a professional treasury
• Large companies
• Pension funds
• Companies with a professional treasury
• Private investment structures with professional treasury facilities set up for high net worth clients
• Private clients who meet the criteria of the FinSA and have opted out
• Institutional clients who have opted in

• Financial intermediaries
• Insurance companies
• Foreign clients subject to prudential supervision
• Central banks
• National and supranational institutions under public law with a professional treasury
• Professional clients who have opted out

4. Change in classification

The FinSA provides for the possibility to change category, upon written request by the client, and provided that the required conditions are met.

4.1  Change to a more limited protection category (opting out)

A “private” client may apply to be considered a “professional” client in the following cases:
•  The client has (1) assets of at least CHF 500,000 and (2) the knowledge necessary to understand the risks of investments, thanks to personal training and professional experience or comparable experience in the financial sector
or
•  The client has assets of at least CHF 2 million.

Direct investments in real estate, social insurance claims and occupational pension assets are excluded from the above amounts.

The following clients may apply to be considered as “institutional” clients:
•  Swiss or foreign collective investment schemes (or their management companies), not subject to prudential supervision;
•  Companies, pension funds and other institutions serving occupational pension purposes, provided they have a professional treasury.

4.2 Change to a category offering broader protection (opting in)

•  A “professional” client may request to be treated as a “private” client.
•  An “institutional” client may request to be treated as a “professional” client.

5. Code of conduct

Rules of conduct are an important element of investor protection. For this reason, the FinSA obliges FSPs to comply with the obligations under supervisory law when providing financial services to “private” and “professional” clients. These rules of conduct therefore do not apply to “institutional” clients.

5.1 Obligation to inform

In order to meet this information obligation, the FSP shall, in particular, make available to their clients (i) information concerning the FSP (e.g. via an information brochure detailing its name, address, field of activity, etc.) and (ii) information on the financial services that the FSP may provide.
All of this information regarding CBH can be found below, under points 7, 8 and 9. The Bank’s presentation brochure is available to clients on demand. In addition, all relevant information is also available on the CBH website: www.cbhbank.com

In addition, the FSP informs its clients about financial services, costs, products and risks. In particular, clients are informed about (i) the financial service which is the subject of the personalized recommendation and the related risks and costs, (ii) the economic relations of the FSP with third parties with respect to the financial service concerned and (iii) the market offer taken into account for the selection of financial instruments by the FSP.

In addition, a Basic Information Sheet (“BIS”) on financial instruments is made available to “private” clients when the acquisition of these instruments is not carried out within the framework of a discretionary management mandate. Thus, in the scope of personalized recommendations, the BIS enables clients to obtain information on the characteristics, risks and costs of the financial instrument concerned, allowing for an easier comparison between the various financial instruments.
When the advice or recommendation is given in absentia, the BIS can be made available to clients after the transaction has been concluded, provided that their approval has been obtained beforehand.

5.2 Appropriateness and adequacy of financial services

The obligation of the FSP to verify the appropriateness and suitability of the financial services offered to its clients varies depending on the financial services offered to clients:

Financial services

Verification

Investment advisory services related to individual transactions, without taking into account the client's entire portfolio

• the FSP inquires about the client's knowledge and experience
• The FSP verifies the appropriateness of the financial instruments before recommending them to the client

Asset management or investment advisory services taking into account the client's entire portfolio

• the FSP inquires about the client's financial situation and investment objectives
• the FSP also inquires about the client's knowledge and experience with the financial service

Services limited to the execution or transmission of client orders

• the FSP is not required to verify the appropriateness nor the suitability of the transaction
• the FSP shall, however, inform the client of the lack of verification of the appropriateness and suitability of the transaction

If the appropriateness or suitability cannot be assessed due to insufficient information from the client, the FSP will notify the client before providing the financial service.

If the FSP assesses that a financial instrument is not appropriate or suitable for a client, the FSP will advise the client against it prior to the provision of the financial service.

In the case of multiple account holders or beneficial owners:
•  the elements to assess the knowledge and experience normally relate to the account holders or beneficial owners of the relationship. In certain situations, other persons may be taken into account, such as a representative (at the client’s request), or persons authorized by an operating company;
•  the assessment of the suitability is always based on the overall situation of the account holders or beneficial owners of the relationship. Thus, in order to ensure the highest level of protection in accordance with the FinSA, the account holders/beneficial owners will be classified in the category that ensures the highest level of protection (e.g. a joint account opened by a “private” and a “professional” owner will be classified as a “private” client).

5.3 Documentation and rendering of account

The obligation of documentation and reporting means that FSPs:
1. document:
•  the financial services agreed upon and provided to clients, as well as the information provided by clients on which the FSP relied to agree upon and provide the financial service
•  the fact that the FSP did not conduct any suitability or adequacy checks prior to providing the financial service
•  the client’s needs and the underlying reasons for each recommendation, in case of investment advice
2. transmit and report at the request of clients:
•  the financial services agreed upon and provided, as well as their costs
•  the composition, valuation and evolution of the clients’ portfolios
•  the documentation relating to point 1.

5.4 Transparency and diligence in relation to clients’ orders

The requirement for FSPs to be transparent and diligent with respect to clients’ orders means that FSPs:
•  uphold the principles of good faith and equal treatment;
•  execute clients’ orders in an optimal manner, ensuring the best possible result in terms of costs, speed and quality when executing clients’ orders and taking into account the price of the financial instrument and the costs related to the execution of the order;
•  may borrow, as counterparty, the financial instruments from the clients’ portfolios, or transmit such operations as agent, only with the clients’ prior and express consent.

6. Mediation body

Client satisfaction is of utmost importance to CBH. Nevertheless, if CBH does not meet the expectations of its clients, it remains fully available to them to find a concerted solution.

If, despite discussions with CBH, clients find the proposed solutions unsatisfactory, they have the option of contacting the Swiss Banking Ombudsman:

Swiss Banking Ombudsman
Bahnhofplatz 9
P.O. Box
8021 Zurich
Switzerland

This neutral and inexpensive – or even free – mediation body will then examine the request for mediation and the situation in a fair and impartial manner.

Information on the mediation request process is available on the Ombudsman’s website and can be obtained from Relationship Managers.

7. Financial services information

As mentioned in point 2, the Bank offers wealth management, asset management and Family Office solutions. In particular:

Asset management is based on an asset management mandate, whereby the client entrusts the Bank with their assets to manage in accordance with the client’s established risk profile and the risk profile of the selected portfolio. Under the asset management mandate, the Bank is the one to make the investment decisions.

Investment advice is provided by the Bank under an investment advice agreement. The Bank recommends one or more financial instruments to the client, taking into account the client’s entire portfolio, in accordance with the client’s risk profile and the risk profile of the selected portfolio. In the context of investment advice, the investment decision, whether or not it follows the Bank’s recommendations, is the sole responsibility of the client.

Execution-only means that the client gives a buy or sell order and the Bank executes it.

As part of the provision of its financial services, the Bank informs its clients of the related costs. The client is informed of the costs and fees when the account is opened, by means of the Fees & Commissions brochure, and during the course of the business relationship, by means of any formal decision to apply a particular fee structure.

In addition, further information on the costs related to a financial instrument may be included in the Basic Information Sheet (BIS), or in the prospectus, if such documentation is available for the type of instrument concerned.

In all cases, the actual costs and fees related to the transactions are indicated on the transaction advice.

8. General risks related to financial instruments

Trading and holding financial instruments offer opportunities and come with financial risks. Clients must understand the risks associated with the various instruments they wish to trade and use. To this end, the Bank provides its clients with the SBA’s “Risks of Trading in Financial Instruments” brochure.

This brochure is given to clients when they open an account and is also available on the Swissbanking website. Clients can also request it from their Relationship Manager and ask any questions they may have.

9. Conflicts of interest

A conflict of interest is a situation in which opposing interests conflict. This is the case when the interests of clients, those of the Bank, its employees or other intermediaries, are in conflict. For example, a conflict of interest arises:
•  in the context of trading in financial instruments, the Bank’s own interests (income) may conflict with those of its clients;
•  when the Bank receives remuneration from third parties with whom it has an economic relationship;
•  when the Bank remunerates its employees according to their performance, and intermediaries (insofar as this is authorized).

In order to ensure that these potential conflicts of interest do not put clients at a financial disadvantage, the Bank has implemented measures to prevent and manage such conflicts, including:
•  the adoption of organizational measures and procedures aimed at protecting the interests of clients (in particular the establishment of information barriers, separation of responsibilities, reporting and monitoring of transactions, etc.);
•  informing clients that the Bank may be an investment fund manager and that, in this capacity, it may receive a management fee;
•  informing clients of the ranges of remuneration obtained from third parties with whom the Bank has economic relations; these benefits or remunerations may be related to products held, delivered or purchased at the clients’ request;
•  informing clients, whose relationships have been established through third parties acting as intermediaries, of the remunerations or commissions paid by the Bank to these third parties; moreover, if the clients concerned receive services from an independent financial advisor or from an external asset manager while using the Bank for custody services and execution of market transactions, the Bank may pay a portion of the income from this relationship to the intermediary in question.

CBH complies at all times with the principles of its policy on the prevention, management and mitigation of conflicts of interest.

10. Other mentions

This notice is intended exclusively for the clients of CBH Compagnie Bancaire Helvétique SA.

The General Terms and Conditions, any other terms and conditions and any contract entered into with CBH, apply and remain in force.

Although every care has been taken in the preparation and review of this document, CBH does not accept any liability for the adequacy, reliability, completeness or accuracy of its contents, as some of the information provided in this document may have changed since it was given to clients.