FINMA Circular 2025/2 – Full Implementation of Conduct Duties under FINSA and FINSO

• Financial service providers must present all information relevant to investment decisions in a clear, comprehensible, and comparable manner. This includes all costs, risks, retrocessions, and potential conflicts of interest. For structured products and derivative instruments, enhanced transparency requirements apply, including a detailed cost breakdown.
• The documentation requirements for suitability and appropriateness assessments have been refined. In addition to standard criteria such as investment objectives, financial situation, knowledge, and experience, regular updates of client profiles are expected – particularly for discretionary mandates or in the event of significant market changes.
• Institutions offering or distributing Contracts for Difference (CFDs) or comparable leveraged products must publish quarterly statistics on the percentage of clients who have incurred losses. This measure aims to strengthen market transparency and investor protection in high-risk product areas.
• The Circular clarifies that conduct duties also apply to securities lending, Lombard loans, and other leveraged products. Clients must be appropriately informed about related risks, counterparties, and collateral arrangements.
• Financial service providers issuing or distributing their own products are subject to stricter disclosure obligations. Any potential conflicts of interest and economic dependencies between advisory, distribution, and issuance activities must be clearly disclosed.
• FINMA reiterates established case law regarding retrocessions and third-party remuneration: such payments may only be retained if the client has explicitly waived them. New, higher standards of transparency and traceability apply to the disclosure process.

FINMA expects financial service providers to document compliance with these requirements and to integrate corresponding controls into their internal control systems (ICS).
Audit firms and supervisory organisations (e.g. AOOS, FINcontrol Suisse) will review the effective implementation as part of their annual supervisory reviews.

FINMA Circular 2025/2 strengthens investor protection and sets clear standards for conduct duties under FINSA and FINSO.
Financial institutions are expected to ensure that processes, internal directives, client documentation, and ICS controls are fully aligned with these requirements by Q3 2025, ensuring ongoing regulatory compliance.