With the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), two new financial market laws came into force at the beginning of 2020 with a major impact on the asset management industry.
KPMG’s latest issue of the Evolving Asset Management Regulation (EAMR) report comes in a year that marks more than just the beginning of a new decade. In January 2020, we predicted that it would be a busy year on the regulatory front and would herald a challenging decade. Right at the beginning of the year, two new financial market laws came into force, the Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), bringing major implications for the asset management industry.
The changes introduce cross-sectoral legislation with stricter customer protection requirements – and the effort required on the part of financial service providers in this country should not be underestimated.
Independent asset managers will be most affected by changes. They now require a licence and will be subject to prudential supervision in future. The increased regulatory requirements for asset management mean that many asset managers must fundamentally rethink their business models. This is compounded by rising expectations and growing pressure from clients to think and act more "green" when making investment decisions.
Adding the coronavirus pandemic to the mix, the January forecast now stands against the backdrop of a new, all-encompassing threat that is exerting great pressure on society and the economy. We’re currently going through a period in which society is changing at its deepest core; it’s a time of reorientation and – let’s hope - improvement.
The asset management industry is being called upon to support the recovery of the economy and society and to play an active role in shaping change. Like all supervisory authorities in general, the Swiss regulator FINMA strives to promote economic growth and encourages companies to exercise their duty of care towards customers. Globally and locally, the agendas of the supervisory authorities have not changed fundamentally, but clear priorities have emerged.
The world as we know it is collapsing. But ready to take its place is another – with new areas of possibility forming. We all have to embrace this evolving new reality and, if possible, make use of it. This includes an increasingly digital society, new working practices, demands for more sustainable financing models and investment strategies and a greater awareness of global interconnectedness.
KPMG’s EAMR report 2020 highlights global issues and trends that have had and may have an impact also on the asset management industry in Switzerland and the individual asset managers based and operating in this country.
Key questions for CEOs
- Do we have all aspects of our liquidity management under control and are we improving our stress testing scenarios?
- How do we stand in terms of the financial, operational and economic resilience of our organization? What lessons are we learning from the current crisis and how can we demonstrate to regulators that we have learned those lessons?
- Are we living a culture of compliance across all levels of our organization and do we maintain it in all our activities and business decisions?
- Do we critically address the question of what added value we offer our investors and clients? Is our communication transparent and meaningful?
- Are we preparing for the transition to risk-free interest rates?
- Have we defined clear ESG criteria and developed a sound ESG strategy? How do we implement these in practice?
- Do we identify and seize new product and market opportunities?
- Are we equipped to deal with the trend towards renationalization of the economy? How do we deal with newly established and falling borders and the opportunities and challenges they present?