The Financial Services Act (FinSA) and the Financial Institutions Act (FinIA), lead to a tightening of the requirements for asset managers.
One consequence of this new regulation is that many asset managers have already ceased their activities due to the additional costs and higher requirements.
As of Jan. 12, 2023, only 596 of the more than 2,500 asset managers originally announced have been FINMA-approved. These new laws lead to a distortion of competition in the industry and to a disadvantage of smaller asset managers.
Another problem resulting from overregulation is investor uncertainty and dissatisfaction. Due to the additional documents and information they have to sign, many investors feel overwhelmed. This can lead investors to stop working with asset managers and lose confidence in the financial industry.
However, it is also important to note that regulation of financial service providers and asset managers is an important task to ensure that the financial system is stable and consumer interests are protected. But it is also important that regulation be proportionate and fair, and that it seek to minimize the impact of its decisions on the financial industry and consumers. One way to do this would be to focus regulation on the risks and issues that are truly relevant and to ensure that requirements are workable and implementable.
It is also important that FINMA and supervisory organizations work more closely with asset managers to ensure that regulations are meaningful and effective. Ways to support smaller asset managers to minimize the burdens of regulation and promote fair competition should also be explored. This is a key point that is missing from FINMA's core mandate.
In conclusion, it is important that regulations achieve their goals without overburdening the financial industry and consumers. It is important that regulations are carefully monitored and adjusted to ensure that they achieve their goals without having a negative impact on the financial industry and consumers.
It is important to emphasize that a healthy and balanced financial industry is based on a diversity of businesses and competition. Smaller asset managers often have specialized expertise and offer personalized attention that can be of great value to some investors. Regulation that makes it more difficult for smaller asset managers to operate may cause investors to turn to larger, less specialized firms. In the long term, this leads to a reduction in choice and a reduction in competition.
It is also important to note that smaller companies are often the driving force behind innovation and progress. Giving them the opportunity to develop and grow also promotes the development of the financial center as a whole. Regulation that penalizes smaller companies can lead to a less innovative and competitive financial center in the long run.
It is therefore important that regulators ensure that regulations are appropriate and fair, and that they strive to minimize the impact of their decisions on the financial industry and consumers. This requires careful balancing of various interests and continuous monitoring and adjustment of regulations to ensure that they achieve their goals without having a negative impact on the financial industry and consumers. One way to achieve this could be to focus regulation on the risks and issues that are truly relevant and to ensure that requirements are workable and implementable.
Another important step would be to have regulators work closely with the financial industry to ensure that regulations are meaningful and effective. Ways to support smaller asset managers to minimize the burdens of regulation and promote competition should also be explored.
It is also important that regulations protect consumers' interests and provide them with adequate risk warnings. One way to do this could be to make information easier for consumers to understand and access.
Overall, it is important that regulations achieve their goals without overburdening the financial industry and consumers. Striking a balance between protecting consumers and promoting competition and innovation in the financial center is crucial to ensuring that the financial center can remain successful in the future.