Five Years Of FINMA Supervision: What It Means For Swiss Trustees And Their Clients

Five years have now passed since Switzerland introduced mandatory licensing for trustees under the Financial Institutions Act (FinIA). The reform marked one of the most significant regulatory evolutions in the country’s trust and fiduciary landscape, moving the sector from a largely self-regulated environment to a fully supervised regime overseen by the Swiss Financial Market Supervisory Authority (FINMA).

For international families and their advisers using Swiss trustees, this transition represents an important step in strengthening oversight, consistency and client protection.

The regime was designed to strengthen market integrity, introduce more uniform professional standards and enhance client protection across the financial sector. FINMA itself has described the licensing framework as both a challenge for firms and a seal of quality for those that meet the regulator’s expectations.

The introduction of mandatory licensing

Under FinIA and its implementing ordinance (FinIO), trustees carrying out their activities on a commercial basis must obtain a licence and satisfy strict personal, financial and organisational criteria. In practice, this generally applies to firms exceeding defined commercial thresholds, such as more than CHF 50,000 in annual revenue from trustee activities, more than 20 ongoing client relationships, or trust assets exceeding CHF 5 million.

These requirements represent a landmark change for a profession that had previously operated with limited direct regulatory oversight.

The transition period and industry response

As many will recall, trustees active when FinIA entered into force were granted a transitional period through 31 December 2022, provided they submitted their licence applications in time. During this phase, the industry worked intensively to adapt to new expectations around compliance, risk management, governance, and supervisory oversight.

Five years on, the licensing process has proven to be a significant challenge for parts of the industry with FINMA’s own data showing that around 30% of affected companies may never receive a licence.

Implications for trustee firms and their clients

For trust companies still awaiting approval – or those unlikely to receive a licence – this has important practical implications for both firms and their clients.

Trustees are legally classified as financial institutions under FinIA, meaning that operating without a FINMA licence is not permitted. For those unable to meet requirements, options to continue are extremely limited.

Firms that cannot or will not meet licensing requirements must either wind down their trustee operations or seek alternative models, including mergers, succession arrangements, or partnerships with compliant entities.

Options such as switching to a foreign trustee licence, resigning and acting solely as a protector, or transferring activities to another jurisdiction all come with professional and client relationship trade-offs.

What clients and advisers may wish to consider

For families with Swiss trust structures, the introduction of FINMA supervision is a useful opportunity to review existing trustee arrangements. Advisers may wish to confirm that their trustee either already holds a FINMA licence or is operating within the regulatory framework while its application is being finalised. Where firms ultimately do not obtain a licence, trusteeships may need to be transferred to a compliant provider, and early planning can help ensure continuity and minimise disruption to the structure.

More broadly, the new regime places greater emphasis on governance, risk management and operational substance. For many clients this will reinforce the importance of working with trustees that have the organisational depth, regulatory infrastructure and long-term stability required to operate within a supervised environment.

A maturing fiduciary market

Five years on, the introduction of FINMA supervision has helped accelerate the professionalisation of Switzerland’s trustee sector. Firms have strengthened governance frameworks, invested in compliance and risk management infrastructure, and placed greater emphasis on operational substance and transparency.

For clients and their advisers, this evolution reinforces Switzerland’s position as a well-regulated and internationally credible jurisdiction for the administration of trust structures.

At Praxis, our longstanding commitment to robust governance, transparency and professional excellence aligns with the principles underlying FinIA and FINMA’s supervisory expectations. We continue to support clients through this transition, ensuring that their trust structures are managed with integrity, expertise and stability.

For more information on our private wealth services in Geneva, please reach out to Neil McPartland.