FinSA and FinIA in Practice: Rules of Conduct for Wealth Managers

FINMA Circular 2025/2 “Rules of conduct under FinSA/FinSO”, in force since January 1, 2025, sets out in practical terms how Swiss wealth managers, banks, and securities firms must implement their statutory information, suitability, and transparency duties toward clients. It forms FINMA’s binding interpretive basis for the Financial Services Act.

The essentials at a glance

• In force since January 1, 2025: FINMA Circular 2025/2 sets out the rules of conduct under FinSA and FinSO for all licensed financial service providers.
• Six key areas: advice classification, CFD risk disclosure, concentration-risk information, granular suitability testing, conflict-of-interest management, and retrocession transparency.
• New since June 2026: FINMA Guidance 03/2026 calls for improvements in individual portfolio management around suitability testing, product selection, and handling conflicts of interest tied to proprietary products.
• Proprietary products in focus: Objective, documented selection criteria instead of distribution incentives have been mandatory since 2025 and have come under closer supervisory scrutiny since 2026.
• Key compliance lever: Clean documentation of the form of advice, suitability testing, and product selection remains at the core of implementation.

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What does FINMA Circular 2025/2 regulate?

The circular sets out six areas of conduct obligations under FinSA: the classification of advice formats, risk disclosure for contracts for difference (CFDs), information on concentration risk, granular suitability testing, conflict-of-interest management for proprietary products, and transparency on retrocessions. FINMA introduced these requirements in response to deficiencies it identified during on-site inspections at the majority of the institutions reviewed.

Most provisions have applied since January 1, 2025. For particularly complex implementation requirements, in particular CFD reporting, concentration-risk information, and the visual highlighting of retrocession disclosures, FINMA granted a staggered transition period until June 30, 2025. That period has since expired, and the requirements now apply in full.

Which six rules of conduct are at the center?

The six areas mainly concern documentation toward clients: from classifying the form of advice to risk disclosure and the disclosure of conflicts of interest and compensation. In detail:

• Clear classification of advice formats: Financial service providers must document, before or at the latest when providing the service, whether they offer transaction-related or portfolio-related investment advice. In the case of transaction-related advice, they must explicitly state that it is purely instrument-based and does not take the client portfolio into account.
• Tighter CFD risk disclosure: Providers of contracts for difference must comprehensively inform retail clients about margin calls, unlimited loss risk, leverage effects, and market risks, and must report quarterly on the share of retail clients who lost money over the preceding 12 months. New market participants without a sufficient track record are, for the time being, subject to the EU standard warning on the risk of loss in CFD trading.
• Concentration-risk disclosure obligations: In portfolio management and portfolio-related advice, clients must be informed about above-market risk concentrations once thresholds for individual securities or individual issuers are reached. Collective investment schemes with their own regulatory risk diversification are exempt.
• Granular suitability testing: Knowledge and experience must be assessed separately for each relevant investment category, calibrated to investment strategy and risk profile. A blanket question about general financial experience is no longer sufficient.
• Conflict-of-interest management for proprietary products: Financial service providers must disclose whether their market offering comprises only proprietary, both proprietary and third-party, or only third-party financial instruments, and, where the offering is mixed, must demonstrate a defined, objective selection process free of specific remuneration incentives for proprietary products.
• Retrocession transparency: Compensation received from third parties must be visually highlighted in standard-form contracts. Information on retrocessions actually received must, in principle, be provided free of charge on request.

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What is new for proprietary products since June 2026?

FINMA Guidance 03/2026 (June 3, 2026) on product risks in individual portfolio management (conflict-of-interest with in-house products) points to deficiencies identified in suitability and appropriateness testing, product selection, and the handling of conflicts of interest related to proprietary products. It thereby provides further detail on requirements under Circular 2025/2 that have already applied since 2025.

Specifically, FINMA expects transparency about the product universe used, objective and traceable selection criteria for adding instruments to a portfolio, the absence of remuneration incentives that favor proprietary products over third-party ones, and the concrete disclosure of unavoidable conflicts of interest to clients. The guidance should be read as a clarification of existing duties of care, not as a new rule, but it shows that supervisory reviews focus precisely on this interface.

What does this mean for wealth managers with proprietary investment solutions?

Wealth managers who use proprietary investment solutions such as Actively Managed Certificates or fund mandates in client portfolios should document the selection process and design it around objective, industry-standard criteria, regardless of whether an instrument comes from their own firm or from a third party. What matters is that the selection criteria are traceable and that remuneration structures do not favor proprietary products over equivalent third-party products.

In practice, that means periodically checking whether the selection process is still current and documented in a traceable way, and providing clear, case-specific rather than blanket disclosure whenever an unavoidable conflict of interest exists. Generic references to considering both proprietary and third-party products are not sufficient for FINMA.

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What practical steps are needed now?

The transition periods under Circular 2025/2 have expired, and full implementation has been mandatory since mid-2025. What makes sense now is a stock-take against Guidance 03/2026: where can the selection process for proprietary products be documented more comprehensively, and where could conflict-of-interest disclosures be worded more precisely?

Three levels remain central here. First, IT systems: quarterly CFD reporting and granular suitability testing require structured, auditable data management. Second, documentation: investment advisory and portfolio management agreements, client information documents, risk-profiling questionnaires, and retrocession and conflict-of-interest disclosures should be reviewed periodically for completeness. Third, training: staff need ongoing refreshers on distinguishing between forms of advice, on granular suitability testing, and on recognizing conflicts of interest, particularly around proprietary products.

Frequently asked questions about FinSA and FinIA in practice

Since when have the rules of conduct under FINMA Circular 2025/2 applied?

FINMA Circular 2025/2 “Rules of conduct under FinSA/FinSO” has been in force since January 1, 2025. For particularly complex requirements such as quarterly CFD reporting or the visual highlighting of retrocession disclosures, FINMA granted a transition period until June 30, 2025, which has since expired.

What are the six key areas of the circular?

The circular sets out the classification of advice formats, risk disclosure for contracts for difference, information on concentration risk, granular suitability testing, conflict-of-interest management for proprietary products, and transparency on retrocessions. All six areas primarily concern documentation and communication toward clients.

What did FINMA criticize in its Guidance 03/2026?

In its guidance of June 3, 2026 on product risks in individual portfolio management, FINMA points to deficiencies in suitability and appropriateness testing, product selection, and the handling of conflicts of interest tied to proprietary products. Among other things, it expects transparent selection criteria and the disclosure of unavoidable conflicts of interest.

What does this mean for wealth managers offering proprietary investment solutions?

Wealth managers who use proprietary financial instruments must disclose whether their market offering comprises only proprietary, both proprietary and third-party, or only third-party products, and must be able to demonstrate a documented, objective selection process free of distribution incentives for proprietary products. Unavoidable conflicts of interest must be disclosed to clients in concrete terms; generic references are not sufficient.

How granular must the suitability test be under FinSA?

Knowledge and experience must be assessed separately for each relevant investment category, calibrated to the complexity and risk profile of the products used. A blanket question about general financial experience is no longer sufficient, and collecting net assets alone is only adequate if it is ensured that clients can assess their own loss-bearing capacity.