FINMA Completes 94% of Portfolio Manager and Trustee License Applications

Since January 1, 2020, Switzerland has required portfolio managers and trustees operating on a commercial basis to obtain a FINMA license. This regulation stems from the Financial Institutions Act (FinIA), which was introduced to enhance investor protection and strengthen the Swiss financial sectors credibility. To ease the transition, a three-year grace period was granted, allowing institutions to continue operations while they applied for the necessary licenses.

As the deadline approached at the end of 2022, many institutions rushed to submit applications. FINMA had advised firms to apply early, but over half of the 1,699 applications were received in the final four months of the transition period. This influx led to delays in processing, with more than 40% of applicants needing at least five rounds of revisions before their applications could be considered. Despite these challenges, by February 2025, FINMA had processed over 94% of all applications.

While FINMA has successfully processed most license applications, 94 cases remain under review, with some involving criminal investigations. These institutions can continue operations while FINMA reaches a final decision. Meanwhile, FINMA continues to enhance regulatory oversight, as evidenced by the 3,221 change requests it has already processed for licensed firms.

So, why does FinIA matter?

The Financial Institutions Act was designed to ensure a high standard of financial management. By requiring licenses, Switzerland aimed to increase transparency, reduce risks, and maintain investor trust. The licensing process ensures that portfolio managers and trustees adhere to professional standards, comply with legal requirements, and are subject to ongoing oversight. Essentially, it is a protective measure to ensure that clients entrusting their assets to financial professionals are dealing with reputable firms.

Beyond licensing, FINMA plays a broader role in maintaining financial stability. It oversees anti-money laundering (AML) regulations, ensuring that Swiss financial institutions comply with international standards. It also monitors risk management across various sectors, stepping in when irregularities arise. For example, FINMA enforces strict supervision over banks, insurance companies, and securities firms, ensuring they follow compliance rules to prevent financial misconduct.

Looking at the bigger picture, Switzerland has a strong legal framework to protect investors. Apart from FinIA, other key regulations include the Financial Market Infrastructure Act (FMIA), which governs securities trading, and the Anti-Money Laundering Act (AMLA), which imposes strict due diligence requirements on financial institutions. Together, these laws reinforce Switzerlands reputation as a secure and transparent financial hub.