Federal Council Enforces New Fintech Regulations
An amended banking law is coming into force as per 1 August 2017. The revision is meant to lessen market entry barriers for fintech entrepreneurs. In addition, it should make the Swiss financial market more competitive. Start-ups will also benefit from that.
Changes
The regulations effective since 1 August are supposed to specifically help fintech companies that are not involved in typical banking operations. The goal is to eliminate any market entry barriers. This is also of value to start-ups willing to establish themselves in the fintech market. Pursuant to the new regulations, in the future fintech companies will be regulated depending on their risk potential. To achieve this, the banking law will have to be amended. In practice, this will provide two aids:
1. Pursuant to the current banking law, acceptance of funds for processing purposes may be withdrawn from within seven days. From tomorrow on this period is extended to 60 days.
2. In addition, some space for innovation has been created: From 1 August 2017 acceptance of public deposits of up to one million francs will no longer be classified as commercial. Thus in the future no permit will be required up to this amount. The aim is to make it possible for companies to test their business model before they have to apply for a permit for public deposits of more than one million francs. However, they have to draw the attention of depositors to the fact that such deposits are not secured by any collateral.
These changes, however, are of benefit not only to fintech companies and start-ups. They are also advantageous to existing providers of financial services. Thus unfair competition should be prevented.
Forthcoming Changes
It is expected that the banking law will also be amended. Now companies that accept public deposits of up to 100 million francs without investing or paying interest on them are going to be classified by the banking law into a new permit category. Compared with the existing banking permit procedure, lower permit and operational requirements will apply to such new categories as far as financial reporting, auditing and collateralisation of deposits are concerned. The Upper Chamber of the Swiss Parliament spoke for such an amendment in December 2016. The National Assembly is going to discuss it this autumn.
