Legal and regulatory framework in the context of Open Banking in Switzerland

Introduction

Open banking enables TPP, e.g. FinTech companies offering services such as payment initiation or account information services, to use the banks' customer data, under the prerequisite of the consumers’ consent. For this purpose, the bank provides an application-programming interface (API). APIs open “channels” to TPP, which allow quick and easy data exchanges in a standardized way.

TPP are in particular faced with the challenge of finding their way in the dense framework of legal and regulatory requirements and then positioning themselves in such a way that the applicable rules can be complied with.

Banking

TPP of payment services could be seen as deposit-taking from the public and therefore require a banking licence from the Swiss Financial Market Supervisory Authority (FINMA). However, it is possible to avoid the qualification and thus, requiring a banking licence, if TPP structure themselves in a way that they meet the exceptions to the concept of deposit-taking from the public according to art. 5 para. 3 Banking Ordinance (BO). The so-called settlement accounts exception may be of particular interest, allowing a maximum holding period of 60 days to process the customers’ payment transactions.

Additionally, there is a sandbox option, which permits public deposits of up to CHF one million as long as certain information obligations towards customers are met. Lastly, there is also a so-called FinTech licence, an authorisation category with simplified requirements, allowing deposit-taking from the public up to a maximum of CHF 100 million with the limitations that no interest are paid on such deposits and the operators are not allowed to invest the funds received from the depositors.

Financial market infrastructure

Financial market infrastructures, such as multilateral trading facilities (MTF) or central counterparties generally require a licence from the FINMA. Furthermore, outsourcing essential services to TPP requires a FINMA approval in advance (cf. art. 11 FMIA).

Payment systems, possibly qualifying as a financial market infrastructure, benefit from the special provisions under art. 4 para. 2 Financial Market Infrastructure Act (FMIA). They only require a licence if this is necessary for the proper functioning of the financial market or the protection of financial market participants and if the payment system is not operated by a bank (cf. art. 4 para. 2 FMIA). So far, only the Swiss Interbank Clearing system (SIC) is designated by the SNB as a systemically relevant payment system, however, a practice has yet to be established in this regard.

Financial Institution and Services

The Financial Institutions Act (FIA) and the Financial Services Act (FSA) are expected to enter into force on 1 January 2020. TPP providing securities transactions, e.g. online brokering systems, might require a licence from FINMA (cf. art. 5 FIA), if their offer qualifies as one of a financial institute, i.e. a professional asset management service for third parties (cf. art. 2 para. 1 FIA for the listed financial institutes).

Moreover, the FSA provides so-called duties of conduct for the provision of financial services and financial instruments, namely the conduct of an adequacy and suitability test on the customer interested in the financial service (cf. art. 10 et seqq. FSA).  Lastly, customer advisors (natural persons) working for an unlicensed financial services provider (c.f. art. 5 FIA) need to register with a customer advisor register, if they serve customers in Switzerland, regardless of their business domicile (cf. art. 28 FSA).

Anti-Money Laundering

Financial intermediaries, namely, persons who provide services related to payment transactions (cf. art. 2 para. 3 lit. b Anti-Money Laundering Act, [AMLA]), are subject to anti-money laundering regulations and must comply with the obligations of conduct under the AMLA and either join a self-regulatory organisation (SRO) or be directly supervised by FINMA.

However, AMLA's due diligence obligations may be waived, for example, if certain threshold values in the area of cashless payment transactions are not exceeded (cf. art. 11 Anti-Money Laundering Ordinance-FINMA [AMLCA-FINMA]).

Consumer Credit

The Consumer Credit Act (CCA) regulates and limits the granting of credits to consumers. A credit qualifies as a consumer credit within the meaning of the CCA if it is granted to individuals for purposes other than business or commercial activities and either the credit grantor or the credit intermediary act on a commercial basis (art. 1 in conjunction with art. 2 and 3 CCA). In the case of a credit intermediary, the persons granting the credits may also act on a non-commercial basis and the contract still qualifies as a consumer contract (e.g. crowd lending).

Credit grantors or, in the case of credit intermediation, the credit intermediary are obliged to fulfil the requirements of the CCA and in particular carry out a creditworthiness check and observe the form requirement of art. 9 CCA. Non-compliance with these provisions may result in the nullity of the credit agreement (cf. art. 15 CCA) or be sanctioned by a fine (art. 32 et seq. CCA).

Conclusion

Financial market law, in particular, offers simplifications and exceptions for innovative market participants, but is still strongly regulated. The entry hurdles for TPP remain relatively high. It is therefore advisable to clarify very precisely, which obligations are applicable for the specific case, since a breach of the obligations can lead to criminal liability.