The Financial Institutions Act: licensing portfolio managers and trustees

The licensing cascade

FinIA arranges the financial institutions it governs in a hierarchy of licences, often described as a cascade. A licence of a higher category includes the right to carry out the activities of the lower ones. A bank licence covers the activities of a securities firm, a fund management company or a manager of collective assets. A fund management company may also manage individual portfolios, just as a manager of collective assets may act as portfolio manager. At the bottom of the cascade stand portfolio managers and trustees, for whom the Act created a new licensing requirement. A portfolio manager is anyone who, on a commercial basis, manages assets in the name and for the account of clients on the basis of a power of attorney. A trustee is anyone who, on a commercial basis, manages or disposes of separate assets for the benefit of a beneficiary or for a specified purpose on the basis of the instrument establishing a trust.¹

The inclusion of trustees is a Swiss peculiarity. Switzerland has recognised foreign trusts since it ratified the Hague Convention on the Law Applicable to Trusts and on their Recognition with effect from 1 July 2007, but it has no domestic trust law. Professional trustees who administer trusts from Zurich or Geneva nevertheless play a considerable role in international estate planning. Before 2020 they had been subject only to the anti-money laundering rules. FinIA placed them on the same footing as portfolio managers, with the same requirements for organisation, capital and supervision. The chapter on family offices, trusts and foundations examines the consequences for trust practice in more detail. The Federal Council’s project to introduce a trust into Swiss private law, which it put out to consultation in 2022, concerned the substantive law of trusts and left the licensing regime untouched.²

The licensing requirement has several exceptions. Persons who manage the assets of economically or family-related persons are exempt, as are those who act only under certain employee share schemes, those who manage assets as part of a mandate governed by law, such as executors of wills or court-appointed administrators, and single family offices serving one family. The last of these exemptions is of considerable importance for Zurich, which hosts many single family offices. Since the exemption depends on the absence of commercial activity for third parties, its limits in the case of multi-family offices and shared structures require careful analysis in each case.³

Licensing requirements

To obtain a licence, a portfolio manager or trustee must take the form of a sole proprietorship, a commercial company or a cooperative and must be managed effectively from Switzerland. Its management must in principle consist of at least two qualified persons. The Act permits a single qualified manager when the continuity of the business is ensured, for example through a substitute arrangement. The qualified managers must have at least five years of relevant professional experience and training of at least forty hours. The persons responsible for management must enjoy a good reputation and guarantee irreproachable business conduct. The company must have a minimum capital of CHF 100,000, paid in cash, and own funds of at least one quarter of its fixed costs of the previous year, up to a maximum of CHF 10 million. It must also provide appropriate collateral or take out professional indemnity insurance.⁴

The organisational requirements follow the principle of proportionality. Every portfolio manager must identify, measure and control its risks and must have an appropriate internal control system. Risk management and compliance must in principle be independent of the revenue-generating business. Smaller firms, however, may assign these functions to a qualified member of staff who is also active in client business, provided that the firm stays below certain thresholds of employees and revenue and has a low-risk business model. Alternatively, the functions may be delegated to an external specialist.⁵ FINMA added a risk-based element in its licensing practice. It identified so-called high-risk business models, which include firms with a high proportion of politically exposed persons, complex structures, clients from high-risk jurisdictions or unusual products, and subjected those applications to more intensive scrutiny.⁶

Portfolio managers may also manage the assets of collective investment schemes and pension funds, but only within limits. A portfolio manager needs the higher licence of a manager of collective assets if the collective assets under its management exceed CHF 100 million, or CHF 500 million where the schemes are not leveraged and have a lock-up period of at least five years. For pension fund assets, the same logic applies with a threshold for mandatory occupational pension assets.⁷ For most independent asset managers serving private clients, these thresholds are irrelevant, since their business consists of individual mandates. For the larger firms with in-house funds, the thresholds determine whether the more demanding licence must be sought.

The supervisory organisations

The most original feature of FinIA is its model of supervision. Parliament wanted portfolio managers and trustees to be supervised, but it did not want FINMA to take over the direct oversight of more than two thousand small firms. The solution was a two-tier system. FINMA grants and withdraws licences and has the power to take enforcement measures, while ongoing supervision lies with private supervisory organisations that FINMA authorises and supervises in turn. The supervisory organisations check compliance with the licensing requirements and the rules of conduct through regular audits, which they commission from audit firms or carry out themselves. Where they find irregularities that they cannot resolve, they escalate the case to FINMA.⁸

FINMA authorised the first supervisory organisations on 6 July 2020: the Organisme de Surveillance des Instituts Financiers (OSIF) in Geneva and the Organisation de Surveillance Financière (OSFIN) in Neuchâtel.⁹ The Organisme de Surveillance pour Intermédiaires Financiers & Trustees (SO-FIT) in Geneva, successor to the self-regulatory organisation of the Geneva asset managers, followed with effect from 11 August 2020.¹⁰ FINcontrol Suisse AG, based in Zug, was authorised on 29 September 2020.¹¹ The fifth and last was the Schweizerische Aktiengesellschaft für Aufsicht (AOOS), based in Zurich, which FINMA authorised with effect from 27 October 2020 and at the same time recognised as a self-regulatory organisation for anti-money laundering purposes.¹² The combination of the two functions allows a portfolio manager to be supervised prudentially and for anti-money laundering purposes by a single body. AOOS was initiated by the Verband Schweizerischer Vermögensverwalter (VSV), its sole shareholder, while SO-FIT continued the tradition of the Geneva association.¹³

The market of supervisory organisations has begun to consolidate. On 27 November 2025 FINMA approved the merger of FINcontrol Suisse AG with OSFIN. The merged organisation will operate as OSFINcontrol AG once the merger is completed.¹⁴ The consolidation reflects the economics of supervision. Each organisation bears the fixed costs of staff, systems and its own supervision by FINMA, while its revenue depends on the number of affiliated firms, whose total fell after the end of the transitional period. Portfolio managers may change their supervisory organisation, although only with effect from the end of a calendar year.

The frequency of audits depends on risk. The supervisory organisation carries out an annual audit in principle, but it may extend the cycle to up to four years for firms with a low risk profile, provided that the firm submits annual reports.¹⁵ This flexibility has made the regime bearable for small firms. In practice, however, FINMA has repeatedly insisted that the supervisory organisations apply the risk-based approach rigorously. In 2025 it reported that escalations from supervisory organisations to FINMA had increased significantly in the second half of 2024.¹⁶

The transitional period and the numbers licensed

The transitional provisions of FinIA gave existing portfolio managers and trustees three stages to adapt. They had to notify FINMA within six months of the entry into force, that is, by 30 June 2020. They had to join a supervisory organisation within one year of the authorisation of the first supervisory organisation, which set the deadline at 6 July 2021. They had to meet the licensing requirements and submit an application within three years of the entry into force, by 31 December 2022.¹⁷ Those who had started their activity only after 1 January 2020 had to apply for a licence immediately and could operate only once it had been granted.

In the notifications of June 2020, the firms indicated their intentions: 273 planned to apply in 2020, 629 in 2021 and 1,304 in 2022, while 121 announced that they would not apply because they intended to close or merge their business.¹⁸ The expected wave of applications at the end of the period duly arrived. By 31 December 2022 FINMA had received 1,699 licence applications and had granted 670 licences, to 642 portfolio managers, 22 trustees and six institutions acting in both capacities. Some 1,060 institutions had notified FINMA that they would not submit an application. By the same date FINMA had opened 307 investigations on suspicion of unauthorised activity, lodged 27 criminal complaints and placed 153 firms on its warning list.¹⁹ The warning list is FINMA’s public register of firms that may be carrying out activities without the necessary authorisation, and inclusion in it effectively ends a firm’s access to Swiss custodian banks.

The processing of the backlog took more than two years. By 28 February 2025 FINMA had granted 1,532 licences, of which 1,428 arose from applications submitted during the transitional period and 104 from applications submitted from 2023 onwards. Of the 1,864 applications received since 2020, 131 had been withdrawn and 94 were still pending. FINMA reported that it had finished processing more than 94 per cent of the applications from the transitional period and that in more than 40 per cent of cases it had had to request amendments at least five times.²⁰ The last figure speaks for the quality of many applications and for the distance that small firms had to cover in organising themselves according to regulatory expectations. It also shows that FINMA did not treat the licence as a formality. The authority described the licence as a seal of quality and expressed the hope that firms would use the requirement as an opportunity to improve their organisation.²¹

Notes

1. FINMA, “Portfolio managers and trustees”, https://www.finma.ch/en/authorisation/portfolio-managers-and-trustees/. The definitions are found in Article 17 FinIA. FINMA explains that portfolio managers and trustees belonging to a domestic group subject to FINMA’s consolidated supervision are supervised by FINMA itself and not by a supervisory organisation. ↩
2. Federal Office of Justice, “Einführung eines Schweizer Trusts”, https://www.bj.admin.ch/de/einfuehrung-eines-schweizer-trusts. The consultation on the amendment of the Code of Obligations opened on 12 January 2022. The later fate of the project is discussed in the chapter on family offices, trusts and foundations. ↩
3. Art. 2 para. 2 FinIA, bilingual edition, https://www.droit-bilingue.ch/de-fr/9/95/954.1-2-5.html, which exempts, among others, persons who manage exclusively assets of persons with whom they are linked economically or by family ties. Its application to family offices is discussed in the following chapter. ↩
4. Manu Ferro, “Authorisation requirements for portfolio managers”, Pestalozzi Attorneys at Law, 1 December 2020, https://pestalozzilaw.com/en/insights/news/legal-insights/authorisation-requirements-portfolio-managers/; Diana Lafita, “A guide to Switzerland’s new licensing rules for portfolio managers”, IFLR, 10 March 2020, https://www.iflr.com/article/2a63733ixysbvckrrahxu/a-guide-to-switzerlands-new-licensing-rules-for-portfolio-managers. The provisions concerned are Articles 18 to 23 FinIA and the corresponding articles of the Financial Institutions Ordinance. ↩
5. Ferro, “Authorisation requirements for portfolio managers” (n. above), referring to Articles 9 and 21 FinIA and Article 26(2) FinIO. ↩
6. FINMA, “Dossier on portfolio managers and trustees”, https://www.finma.ch/en/documentation/dossier/dossier-vermoegensverwalter-und-trustees/. FINMA explained its “risk-based licensing approach and the concept of high-risk business models” in a presentation of 2021 and held a symposium on its experience with the authorisation procedures on 17 February 2022. ↩
7. Art. 24 para. 2 FinIA, bilingual edition, https://www.droit-bilingue.ch/de-fr/9/95/954.1-24-27.html, with thresholds of CHF 100 million, or CHF 500 million for unleveraged schemes without redemption rights for five years, and for pension assets a threshold of CHF 100 million combined with a limit of 20 per cent of the mandatory assets of an individual pension fund. The FINMA Financial Institutions Ordinance specifies their calculation. The treatment of managers of collective assets belongs to the preceding chapter. ↩
8. FINMA, “Supervisory organisations (SOs)”, https://www.finma.ch/en/authorisation/supervisory-organisations/. The legal basis for the supervisory organisations is found in Articles 43a et seq. of the Financial Market Supervision Act (FINMASA). FINMA supervises the authorised organisations on an ongoing basis and may withdraw their authorisation. ↩
9. FINMA, media release of 7 July 2020 (n. above). ↩
10. FINMA, “FINMA authorises third supervisory organisation”, media release, 12 August 2020, https://www.finma.ch/en/news/2020/08/20200812-mm-ao-bewilligung-2/. ↩
11. Metrika, “FINcontrol Suisse is the fourth supervisory body authorised by FINMA”, https://www.metrika.ch/fincontrol-suisse-is-the-fourth-supervisory-body-authorised-by-finma/. ↩
12. FINMA, media release of 28 October 2020 (n. above). ↩
13. AOOS, “Über uns”, stating that AOOS was initiated by the VSV as the national industry association and that the VSV is its sole shareholder, https://www.aoos.ch/de. FINMA, media release of 12 August 2020 (n. above), stating that the application of SO-FIT was carried by the Organisme d’Autorégulation des Gérants de Patrimoine (OAR-G) and that SO-FIT would be its successor. ↩
14. FINMA, “FINMA approves merger of two supervisory organisations”, 11 December 2025, https://www.finma.ch/en/news/2025/12/20251211-meldung-ao-fusion/. ↩
15. Lafita, “A guide to Switzerland’s new licensing rules for portfolio managers” (n. above). ↩
16. FINMA, “FINMA provides information on the status of licences issued to portfolio managers and trustees”, media release, 11 March 2025, https://www.finma.ch/en/news/2025/03/20250311-mm-abschluss-uvv/. ↩
17. Matthias Kuert, “FinSA and FinIA enter into effect on 1 January 2020 – but a lot of provisions do not apply immediately”, CMS, 11 December 2019, https://cms.law/en/che/legal-updates/finsa-and-finia-enter-into-effect-on-1-january-2020-but-a-lot-of-provisions-will-not-apply-immediately; Ferro, “Authorisation requirements for portfolio managers” (n. above), for the affiliation deadline of 6 July 2021. ↩
18. FINMA, media release of 7 July 2020 (n. above). ↩
19. FINMA, “Expiry of the transitional period: FINMA provides information on the status of licences for portfolio managers and trustees”, media release, 30 January 2023, https://www.finma.ch/en/news/2023/01/20230130-mm-am-02-2023/. ↩
20. FINMA, media release of 11 March 2025 (n. above). FINMA also reported 3,221 change requests from licensed institutions and expected about 1,700 such requests each year. ↩
21. FINMA, “Dossier on portfolio managers and trustees” (n. above). ↩

For general information only. This article does not constitute legal or tax advice, does not replace advice on an individual case and creates no lawyer-client relationship. It reflects the legal position as of September 2025.