Switzerland’s Federal Council , a group of seven people serving as the country’s head of government, started consulting on amendments to the Banking Act and Banking Ordinance in the fintech area on February 1, 2017. The consultation will last until May 8, 2017.
The initiative is expected to reduce barriers to market entry for fintech firms and increase the competitiveness of the Swiss financial center.
Last year, the Federal Council unveiled its intention to eliminate barriers seen by Fintech firms to enter the country. It authorized the Federal Department of Finance to prepare a consolation draft that will allow fintech companies to enter and invest in the country more easily.
The amendments to the Banking Act and Banking Ordinance proposed recently are expected to regulate fintech and other companies that offer services outside normal banking business according to their risk potential.
The Federal Council has come up with a form of deregulation with three key elements:
- A 2-month deadline for holding money in settlement accounts is set. The deadline used to be seven days. It is crucial for securities dealers to ensure the planned main transaction is organised and directly foreseeable. This change requires an amendment to the BankO.
- The Federal Council offers to create an innovation area where companies will be able to test business models before they are finally required to obtain authorization in the case of public funds of over CHF 1 million. Public funds up to CHF 1 million are not classified as operating on a commercial basis and can be exempt from authorization. This change also requires an amendment to the BankO.
- Authorization and operating requirements should be simplified. This concerns the current banking license in the spheres of accounting, auditing and deposit protection for companies that deal with public funds of up to a maximum of CHF 100 million but do not operate in the lending business. This requires an amendment to the BankA.
The financial center of Switzerland will only benefit from the dynamic fintech system. For this purpose, the Federal Council pushed for simplification of the regulatory framework for providers of innovative financial technologies on November 2, 2016. Thus, barriers to market entry for providers in the fintech area should be reduced and legal certainty for the sector overall should be increased.
It is necessary to create an environment in the financial sector that will allow for the development of new business models that are not yet conceivable today. The Federal Council will adopt to these developments and will quickly come up with the necessary regulatory adjustments if required.