Swiss Bankers Reject Call For New Regulations

by Ulrika Lomas, for LawandTax-News.com, Brussels

09 August 2005

The Swiss Bankers Association has said in a Position Paper that it rejects the Swiss Federal Banking Commission (SFBC)’s draft Circular on Internal Surveillance and Control.

While the SBA stated that it supports in principle the goals of the SFBC, it nevertheless believes that no new state regulation is needed because many of the Circular’s planned provisions are already in force in many banks as a result of the SBA’s own 'Directives on Internal Control' issued in June 2002.

These self-regulatory directives were later accepted by the SFBC as part of the body of bank regulation that banks are legally obliged to conform with and they have proven their worth. The SBA suggests that any changes to banking regulation should be made by revising the SBA’s own self-regulatory directives, and that banks should be allowed to formulate bespoke internal regulation rather than adopting a new 'one size fits all' regulatory approach.

The SBA also rejected on principle the new "whistle blowing" clause proposed in the Banking Commission's Circular, arguing that adequate measures are already in place to manage risk.

"In its proposed form the whistle blowing clause would radically change the internal culture of banks as well as the atmosphere in the workplace," stated the SBA.

"The SBA finds the SFBC’s argument that whistle blowing could be an 'early warning' system to be rather wobbly as there are today other and more effective methods with which to control and manage risk," it added.

Other points the SBA criticised were planned regulations regarding the composition and independence of boards of directors, which, according to the SBA, are already well covered by the Swiss Code of Obligations.

The SBA also thought the Circular to be too narrow in its scope which would not survive a cost-benefit analysis if tested on individual cases.

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