The ancient Roman legal tradition posed the enduring question: Quis custodiet ipsos custodes? – Who watches the watchmen?

In Switzerland, Parliament exercises oversight over the Swiss Financial Market Supervisory Authority (Finma).

With the introduction of the Financial Institutions Act (FinIA) and the Financial Services Act (FinSA) in 2020, lawmakers significantly expanded Finma's supervisory responsibilities, particularly with regard to independent asset managers.

Now, Parliament wants to determine whether this framework has proven effective. Last Tuesday, the influential Economic Affairs and Taxation Committee (WAK) of the National Council unanimously adopted a motion calling for a comprehensive evaluation.

Specifically, the review will examine how efficiently and proportionately supervision is carried out across various sectors of the non-bank financial industry, including «independent asset managers, insurance companies, insurance intermediaries and other financial intermediaries,» according to the motion.

Taking Stock After Five Years

If adopted, the motion requires the Federal Council to evaluate the implementation and effectiveness of the supervisory framework introduced over the past five years, since FinIA came into force.

The review will assess efficiency, proportionality, transparency and the cost implications of the current supervisory models. Regarding asset managers, the motion refers to concerns that key objectives of the reform—particularly «efficient and proportionate supervision»—have so far been achieved only to a limited extent.

The committee points to indications of high costs, duplication of supervisory processes and a lack of transparency. Just last week, the Swiss Association of Asset Managers (VSV) criticised the high supervisory fees (as reported by finews).

Governance Also Under Scrutiny

The committee intends to compare the different supervisory regimes systematically. Insurance companies are supervised directly by Finma, whereas asset managers operate under a two-tier system involving supervisory organisations. Independent insurance intermediaries, meanwhile, are subject to dual registration requirements—both at the employer level and individually for employees who have direct customer contact.

The catalogue of questions is broad and, in places, pointed. It ranges from the allocation of supervisory costs and the transparency of risk classifications to governance issues, including an «analysis of potential conflicts of interest and institutional interdependencies within the supervisory framework.»

Centre-Right Initiative, Backed by the Left

According to information obtained by finews, the initiative was launched by a centre-right parliamentary group led by members of The Centre party (formerly the Christian Democrats).

According to observers, support from the political left was largely due to the fact that the motion is deliberately open-ended.

While its central objective is to assess whether FinIA has delivered on its promises, such an assessment inevitably requires examining how Finma has implemented the legislation in practice. To that extent, the initiative can also be interpreted, at least in part, as a criticism of the supervisory authority itself.

Pending Revision of FinIA

Work on the report will overlap with the ongoing consultation on the revision of FinIA, which primarily focuses on the regulation of stablecoins.

This timing creates the possibility that the revision of FinIA could extend beyond its currently envisaged scope. The two processes are likely to influence one another.

Finma Refers to the Legislator

Responding to questions from finews, Finma adopted a cautious stance on the political implications of the motion.

«Finma takes note of the motion,» the authority stated. «It does not comment on the political assessment of parliamentary initiatives.»

The authority added that it would «contribute its supervisory experience and expertise within the scope of its responsibilities and at the request of the competent authorities.» It also noted that it would comment on any legislative changes only «within the framework of the ordinary legislative process.»

Implementing a Legislated Supervisory Model

Substantively, Finma stressed that it is implementing a supervisory framework prescribed by law for the non-bank financial sector. Under the current legal framework, asset managers and trustees are subject to indirect supervision. They require a licence from Finma but are monitored on an ongoing basis by supervisory organisations (SOs), which themselves must be authorised by Finma.

According to Finma, this three-tier model—comprising Finma, supervisory organisations and audit firms—implements the mandate established by the legislator. Responsibility for any legislative amendments, the authority noted, lies with «the competent political authorities.»

Finma also addressed the debate over supervisory costs: «Finma conducts its supervision effectively, on a risk-based basis, efficiently and proportionately.»

According to the authority, developments in supervisory costs reflect the actual supervisory effort required in each sector.

«Despite a significant increase in the number of complex supervisory and escalation cases, supervisory costs have declined slightly compared with the previous year. Complex supervisory cases require more in-depth investigations and additional supervisory measures and are therefore resource-intensive.»

The resulting workload, Finma added, has a direct impact on the «cost-covering supervisory fees» charged to supervised institutions.