New SFAMA Guidelines On Duties Regarding The Charging And Use Of Fees And Costs (Transparency Guidelines) And On The Distribution Of Collective Investment Schemes (Distribution Guidelines) Both Of 22 May 2014

Author:Ms Bettina Rudin, Joana M. Meier-Pinheiro and Romaine Robbiani
Profession:Suter Howald Attorneys at Law
  1. New SFAMA Guidelines on Duties Regarding the Charging and Use of Fees and Costs (Transparency Guidelines) of 22 May 2014 (hereafter "Transparency Guidelines")

    On 22 May 2014, the SFAMA issued the abovementioned Transparency Guidelines, which are recognised as minimum standard by the FINMA.

    1. General Duty to provide Information

      The Transparency Guidelines specify in more detail the duty to provide information to the investor as required in Art. 20 para. 1.c of the Federal Act on Collective Investment Schemes (CISA). They apply also to foreign funds distributed in Switzerland as well as to their representatives and the persons which distribute these funds in Switzerland.

      If foreign law provides for stricter rules regard-ing distribution in Switzerland and these rules are set down in the pertinent fund documents, it must be ensured that Swiss investors also benefit from them. The relevant rules must be explicitly and exhaustively listed in the appendix to the sales prospectus regarding specific information for Swiss investors. The provisions of the Transparency Guidelines apply to all persons and funds only with regard to the relevant activities in Switzerland or from Switzerland.

      The following is to be disclosed in the fund documents such as the fund contract, investment regulations, prospectus or annual report regarding the charging of fees and costs:

      the fees and costs the licensee or its agents may charge to the fund, such as management fees for the fund management company, custody fees for the custodian, management fee and performance fee (if any) for the asset manger and distribution fee for the distributors as well as the incidental costs; the level of such fees; bands or maximum rates may also be specified (in such cases, the actual fees charged must be disclosed in the annual report); the level of the fees and incidental costs in the last reporting period. commissions and fees incurred in connection with the issue and redemption of units which may be charged to the investors. The fees and costs may be listed individually or they can be aggregated under one or more terms (e.g. "all-in fee" or "flat fee"), if certain conditions are observed.

      The following is to be disclosed in the fund documents regarding the use of fees and costs:

      whether the fees may be paid to third parties for the provision of services in connection with the performance of the fund business, without disclosure of the identity of the third party or the amounts paid to them; as well as the services concerned. Additionally to the general information, the licensees and their agents are obliged to answer justified enquiries from current or former investors (to the latter in relation to the period during which they were invested) free of charge under certain conditions.

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