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FINMA, proprietary products and asset management: key points
- FINMA reached a new high in 2025 with 68 supervisory cases opened involving asset managers under Article 17 FinIA, compared with only 9 in 2023.
- The most frequent pattern is the sale of high-risk, complex or illiquid products, including foreign funds without equivalent supervision, actively managed certificates and unregulated issuing companies, without adequate suitability checks.
- When proprietary products were used, FINMA identified conflicts of interest, duplicate fees and missing selection processes.
- Institutions that outsource risk management or compliance remain responsible themselves; control gaps in outsourcing arrangements were a recurring issue.
- Institutions should review their suitability assessments, conflict-of-interest management and due diligence processes now, before a case escalates.
02
Why are increasing numbers of asset-manager cases being escalated to FINMA?
The number of cases involving asset managers under Article 17 FinIA that were escalated to FINMA has risen sharply: from 9 in 2023 to 34 in 2024 and 68 in 2025. Supervisory organisations are primarily responsible for ongoing supervision; FINMA becomes involved only when a supervisory organisation reports a serious breach that cannot be remedied within the specified period. The high and rising number of escalations shows that this is happening with increasing frequency and that the cases often require extensive investigation, sometimes involving client assets in the tens or hundreds of millions.
03
Which products present the greatest risks according to FINMA?
The cases challenged by FINMA repeatedly involved foreign funds without equivalent supervision, actively managed certificates and securities issued by unregulated issuing or structuring companies. Such products are often subject to lower requirements concerning transparency, valuation, liquidity and risk diversification, and in some cases even lack equivalent accounting and external audit requirements. The complexity and limited liquidity of these instruments increased the risk further and led to substantial client losses in several cases.
04
What does the suitability assessment under FinSA require in practice?
Before using a product, an asset manager must enquire about the client’s financial circumstances, investment objectives, knowledge and experience under Article 12 FinSA and derive from them a risk profile and jointly defined investment strategy under Article 17(3) FinSO. Every financial instrument used must fit that risk profile. This was the central issue in many escalated cases: complex or illiquid products were used without adequate assessment of suitability, risk capacity or risk appetite.
05
When does using proprietary products create a conflict of interest?
FINMA requires transparency as to whether third-party financial instruments are also considered in product selection under Article 10 FinSO and a selection process based on objective, customary industry criteria under Articles 24 to 28 FinSO. This was precisely what was missing in the challenged cases: non-transparent duplicate fees, remuneration incentives favouring proprietary products and inadequate diversification in clear conflict with the client’s risk profile. In particular, the use of proprietary products must not be encouraged by remuneration incentives for the persons selling them, and unavoidable conflicts of interest must be disclosed.
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What applies to risk management under FinIA?
An asset manager’s risk management must cover the entire business, including risks inherent in the managed products themselves, such as concentration, liquidity, valuation and conflict-of-interest risks under Article 12(4) FinIO. This includes careful, risk-based due diligence on the instruments used. For unsupervised products, missing audited financial information, outstanding audit opinions or a change of audit firm are clear warning signs that should trigger enhanced review.
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What does outsourcing risk management and compliance mean for an institution’s responsibility?
An institution that outsources risk management or compliance to external service providers remains responsible under Article 17(1) FinIO and must at all times have sufficient resources and expertise to supervise the outsourced activities. FINMA observed, particularly at smaller institutions, that outsourcing often led to standardised rather than institution-specific controls, resulting in unclear responsibilities and control gaps. An institution that outsources should clearly define the scope and responsibilities in the contract and actively monitor the provider’s performance rather than relying on it blindly.
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Frequently asked questions
Does the FINMA Guidance apply only to asset managers under Article 17 FinIA? Primarily yes, but FINMA expressly notes that the findings are also relevant to managers of collective assets, fund management companies, securities firms, banks and insurance companies where they offer individual portfolio management.
Is it enough simply to avoid proprietary products in portfolios? No. Third-party products such as foreign funds or actively managed certificates also require careful suitability assessment and due diligence; FINMA identified shortcomings for both types of products.
What is the greatest risk when outsourcing risk management or compliance? Assuming that responsibility is transferred with the activity. The institution remains accountable and must be able to supervise the outsourced activity actively.
How often does FINMA inspect asset managers? Ongoing supervision is carried out by supervisory organisations; FINMA is involved in serious breaches that cannot be remedied within the specified period. The sharp increase in escalations shows that this is happening more frequently.
What should we review first? The suitability assessment processes for high-risk or illiquid products, the management of conflicts of interest when proprietary products are used, and governance over outsourced control functions.
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