Glossary

Conflict of Interest

A Conflict of Interest arises when a financial services provider or its staff pursues their own interests or those of third parties that are, or could be, contrary to client interests. FinSA requires financial services providers to identify, avoid, or disclose such conflicts (Art. 25 FinSA).

At a glance

Typical Conflicts of Interest arise from retrocessions (rebates from product providers), proprietary trading, or close economic ties with counterparties.

Financial services providers must take appropriate organisational measures to prevent Conflicts of Interest; unavoidable conflicts must be disclosed to the client (Art. 25 para. 2 FinSA).

The Federal Supreme Court, in several rulings including BGE 137 III 393, strengthened disclosure obligations for retrocessions even before FinSA came into force.

Frequently asked questions

01 What must a financial services provider do if it cannot avoid a Conflict of Interest?

If a Conflict of Interest cannot be fully eliminated, the financial services provider must inform the client clearly and in an understandable manner before providing the service. The client must be made aware of the nature of the conflict, its potential effects, and the measures taken. Only after this disclosure may the service be provided (Art. 25 FinSA).

Part of the topic

Finanzberatung

Sources: FINMA · Systematische Rechtssammlung (fedlex)

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