In a 5 December 2017 press release, the Swiss Financial Market Supervisory Authority (FINMA) published the new Circular 2018/3, which will replace its Circular 2008/7 on outsourcing. This new Outsourcing Circular will enter into force on 1 April 2018 and will apply to banks, insurance companies and securities dealers.
FINMA’s press release (available here, together with the text of the Outsourcing Circular 2018/3 “Outsourcing – banks and insurers” and other relevant documents in German, French and Italian) comes exactly one year after the publication of the draft of this circular, which then went through a consultation process (cf. our news of 7 December 2016, available here).
As one of the major modifications compared to the current Circular 2008/7, the new Outsourcing Circular will not only apply to banks and securities dealers, but also to insurance companies. Moreover, the rules on data protection contained in the current Circular 2008/7 have been removed, although FINMA considers that the same level of data protection is guaranteed through the application of the Federal Data Protection Act.
As a consequence of the consultation process, in which many actors took part, FINMA made various amendments to the original draft. In particular:
- The transition period for banks and securities dealers to adapt pre-existing outsourcing contracts has been extended from two to five years;
- Self-assessment by the financial institutions on the existence of an outsourcing falling within the scope of the circular has been emphasised;
- The treatment of intra-group outsourcing has been slightly reworked and allows for a principle-oriented approach.
Circular 2018/3 will enter into force on 1 April 2018. Banks and securities dealers will have a five-year transition period to adapt any pre-existing outsourcing relationships to the new regulatory requirements. As regards insurance companies, the new Outsourcing Circular shall apply to initial authorisations as of its entry into force, although regarding the authorisation of modifications the circular shall only apply from the date the modification of the business plan was submitted or notified to FINMA.
We recommend banks, securities dealers and insurance companies to anticipate any impact this new circular may have and take the necessary steps to ensure compliance.
For our readers’ convenience, an unofficial English translation of the new Outsourcing Circular will be made available on www.dataprotection.ch within the next days.