FINMA is no longer fit for purpose

Given FINMA's toolkit, its border limits and the Credit Suisse rescue, is Switzerland's supervisor still fit for the protective purpose its statute names?

Charles Pycraft · November 2026 · London

Cover card: FINMA is no longer fit for purpose. Navy ground with gold unbalanced-scale motif and a small CP mark; title rendered by the site. An investigation by Charles Pycraft The toolkit is already on the record. An earlier piece in this series sets out what FINMA can and cannot do under Swiss law: it can license, investigate, confiscate profits, ban individuals from the industry and withdraw a licence, and it still cannot impose fines (FINMA: what Switzerland's regulator can and cannot do). A companion piece follows those powers to the border through UBS 2009, Mozambique 2021 and Greensill 2023 (When FINMA's reach stops at the border). This piece asks a different question. Given that toolkit, that border and the Credit Suisse crisis already documented in those notes and in FINMA's own December 2023 lessons-learned report, is the supervisor still fit for the protective purpose its statute names: protecting creditors, investors and insured persons, and ensuring the proper functioning of the markets? The argued answer, on the public record of contingent taxpayer risk, peer comparison and a fine power that is still only a consultation draft, is no.

The fitness test the rescue forced into the open

Credit Suisse's collapse into an emergency takeover in March 2023 is not retold here. The supervisory density, the Parliamentary Investigation Committee's finding that intensive supervision "lacked sufficient impact", and the 2017 capital "regulatory filter" are set out in the toolkit piece and in the committee's 20 December 2024 press release.

What that crisis added to the fitness debate is the contingent public bill. For five months in 2023, Swiss taxpayers stood behind a CHF 9 billion federal loss-protection guarantee and a federal guarantee of up to CHF 100 billion supporting liquidity assistance. Both were terminated on 11 August 2023 without a federal loss. The Confederation reported roughly CHF 200 million in fees and premiums.

No realised loss is not the same as no public exposure. Contingent risk at that scale is, in this piece's argued view, a serious public exposure that raises questions about the effectiveness of earlier supervision. A supervisor that can fill files for a decade and still leave the state standing behind the rescue has failed a practical fitness test, even if every individual tool was used lawfully.

Peer centres price misconduct in cash. Switzerland still does not.

FINMA's own enforcement page states that it does not impose penalties and has no authority to impose fines. Chair Marlene Amstad's April 2023 description of that gap as an exception among major financial centres is quoted in the toolkit piece and is not repeated at length here.

What matters for fitness is the incentive that gap creates. Where a peer supervisor can attach a large cash penalty to a published finding, the price of a serious breach is visible on the balance sheet. Where the Swiss toolkit stops at remedial orders, bans, confiscation of profits and licence risk, the cash signal lands abroad or not at all. Mozambique, as already told in the border piece, is the cleanest public illustration: FINMA made findings on the same day UK and US authorities resolved the matter for about US$475 million.

Germany's BaFin, by contrast, can impose administrative fines: its 2024 annual report records that it opened 195 fine proceedings and imposed fines totalling about EUR 39.9 million on firms and individuals that year. The UK FCA lists financial penalties among its core enforcement powers and publishes annual fine totals. FINMA's own enforcement factsheet is explicit that only criminal authorities can issue fines.

That is not an argument that fines alone would have saved Credit Suisse. It is an argument that a protective purpose which cannot attach a peer-level cash consequence, after the supervisor itself asked for that power, is incomplete by design.

Follow the money: who benefits from the enforcement gap

A fine power is not a moral ornament. It is a price. When peer centres can levy cash penalties and Switzerland cannot, the gap has beneficiaries at category level, even where no named firm is accused here of seeking that outcome.

Banks and securities firms under Swiss supervision face remedial orders, profit confiscation and licence risk, but not an institution-level administrative fine of the kind BaFin and the FCA publish in the tens of millions. In this piece's view the absence of an institution-level fine works as a structural subsidy for regulated business as a category. That is an opinion about how the system is built, and it is not a finding against any firm. Wealth-management and private-banking franchises that compete on confidentiality, speed and relationship continuity benefit when the published price of a serious breach is remedial rather than fiscal. It is fair to ask whether, without a fine at the end, counsel can price the process in advance.

Intermediaries in the self-regulatory layer are a separate case, because their sanctions come from their own organisations and not from FINMA. The VQF and STEP piece covers that. Auditors and professional bodies that certify, review or badge compliance regimes still sell assurance into a market where the state supervisor's cash penalty is missing. None of that names a living individual or firm as having engineered the gap.

FINMA's operating costs rose from CHF 142 million in 2023 to CHF 154 million in 2024 and CHF 172 million in 2025, covered by supervisory fees and levies paid by the institutions it supervises (FINMA financing page; annual reports). Rising cost without a peer-level fine power is not evidence of capture. It is evidence that the centre keeps paying for denser supervision while withholding the cash tool peers use. By comparison, BaFin reports that it opened 195 fine proceedings in 2024 and imposed fines totalling about EUR 39.9 million on firms and individuals (BaFin Annual Report 2024).

One concluded case: Mirabaud, from investigation to confiscation without a fine

A public case that is not retold in the border piece shows where the toolkit lands when it does land.

FINMA opened enforcement proceedings against Mirabaud & Cie SA in June 2021 and concluded them in June 2023. The ruling has been legally binding since August 2023 and the bank did not contest it. What the bank did contest, in court, was FINMA's plan to tell the public. The Federal Supreme Court dismissed that appeal, and FINMA published its account on 17 September 2024 (https://www.finma.ch/en/news/2024/09/20240917-mm-mirabaud/).

FINMA links its investigation to a complex client structure alleged to have been connected with a businessman accused of tax evasion who has since died. It does not name him, and neither does this piece. FINMA found that the bank had seriously violated financial market law: inadequate review and documentation of beneficial ownership and the economic background of numerous transactions, despite indications of increased money-laundering risk. FINMA says the relationships held assets of up to USD 1.7 billion, at times almost ten per cent of the bank's assets under management, and that there had been concrete warnings about them since 2018. FINMA also records that the bank cooperated, reorganised during the proceedings, and took measures the regulator generally considers suitable for restoring compliance.

Measures ordered included further AML and governance remediation, a full risk review of client relationships, re-documentation of elevated-risk transactions from 2018 to 2022, remuneration-policy changes, an audit mandatary, a ban on accepting new clients with increased money-laundering risks until compliance was restored, and confiscation of CHF 12.7 million of unlawfully generated profits for the Swiss Federal Treasury. FINMA said it had opened three enforcement proceedings against individuals and gave no names or details. No outcome of those proceedings is reported here.

None of this is a criticism of the confiscation. The point is narrower: Swiss law gave FINMA no power to add an administrative fine, although it confiscated CHF 12.7 million of unlawfully generated profits for the Federal Treasury. A peer supervisor with fine powers could have attached a published cash penalty on top of remediation. Switzerland still cannot.

Costs up. Fine power still not law.

On 12 August 2026 the Federal Council opened a consultation on Banking Act changes that would give FINMA institution-level fines, periodic penalty payments, earlier intervention tools and a requirement to inform the public about completed proceedings as a general rule (Federal Council press release, 12 Aug 2026: https://www.admin.ch/en/newnsb/GGQLrZYSRx3csZsqryI1F). The consultation runs to 19 November 2026. The Federal Council plans to send a dispatch to Parliament in 2027. FINMA asked for fine powers in its December 2023 Credit Suisse report. Nearly three years on, no bill has reached Parliament.

A fair question follows, framed as a question rather than a claim about anyone's private intent: is the underpowered design an oversight of Swiss consensus politics, or a political choice that keeps the financial centre competitive by limiting how hard the watchdog can bite? Either reading ends in the same place for fitness. Until the proposals are enacted, the law as it stands answers the question.

What "fit for purpose" requires that the toolkit does not yet deliver

Three published gaps remain after the toolkit and border pieces.

First, no client cheque. FINMA does not decide private disputes and does not award compensation. A supervisory finding is evidence for a civil claim, not a remedy. Complex cross-border litigation can generate six-figure or seven-figure costs, putting effective private redress beyond many individuals.

Second, silence by default. Article 22 of the Financial Market Supervision Act keeps individual proceedings out of public view unless there is a particular supervisory need to speak. Published decisions help. Absence of a ruling tells a client little either way. FINMA said it concluded 55 enforcement proceedings in 2025, up from 38 in 2024, and that the very limited legal basis for active communication, and in some cases the courts, restricted what it could tell the public (FINMA annual media conference 2026).

Third, incentives without a cash backstop. The features above may create incentives to emphasise formal compliance while limiting exposure to public financial sanctions. Whether those incentives materially affect behaviour is a legitimate question for supervisory policy. They are not a finding against any named firm.

Taken together, those gaps mean that "watched closely" is not the same as "protected in practice". The earlier pieces in this series document the watching. This one judges the protection.

What should change

Three reforms, grounded in what is already on the Federal Council's table or framed as this piece's argued reading of the peer gap:

1. Enact institution-level fines. On 12 August 2026 the Federal Council opened a consultation on Banking Act amendments that would let FINMA fine non-compliant institutions and charge periodic penalty payments when ordered measures are implemented late (https://www.admin.ch/en/newnsb/GGQLrZYSRx3csZsqryI1F). The consultation runs to 19 November 2026 and the Federal Council plans to send its dispatch to Parliament in 2027. It is a proposal and is not yet law. FINMA has asked publicly for a fining power since April 2023. Passing the proposal into law would close the cash gap that BaFin's roughly EUR 39.9 million in 2024 administrative fines illustrates in practice.

2. Earlier intervention and public information as a general rule for completed proceedings. The same package would allow FINMA to step in earlier where risks are apparent and, in the Federal Council's own words, would mean FINMA "having to inform the public about completed proceedings as a general rule." How far that rule should reach in practice is a matter of opinion. This piece's view is that naming the institution should be the default once a serious case is concluded.

3. A funded path to client redress when supervisory findings establish serious breach. The consultation package, as published, contains no client compensation scheme. A funded redress route after a serious-breach finding is this piece's proposal and is not a pending bill. Confiscation of profits for the Treasury does not put money back with harmed clients.

The first two are already in the Federal Council's own consultation text. The third is the logical counterpart if the protective purpose in FINMASA is to mean protection in practice, not only denser files.

Verdict

On the public record, FINMA is no longer fit for the protective purpose its own law names. For five months in 2023 Swiss taxpayers stood behind a CHF 9 billion federal loss-protection guarantee and a federal liquidity guarantee of up to CHF 100 billion around the Credit Suisse rescue (Federal Finance Administration). Both were terminated without a realised federal loss; the Confederation reported about CHF 200 million in fees and premiums. Contingent exposure at that scale was a substantial public risk, even though the guarantees expired without a federal loss. FINMA still cannot impose fines; BaFin opened 195 fine proceedings in 2024 and imposed about EUR 39.9 million on firms and individuals. In the one concluded case set out above, CHF 12.7 million of profit was confiscated to the Federal Treasury and no fine was available.

When the watchdog fails, the bill lands on the taxpayer, rarely on the offender. That is this piece's argued reading of the pattern, not a claim that every case ends that way, or that any named official or bank executive personally escaped a concluded finding. Some enforcement does land: FINMA can ban, confiscate profits and revoke licences, and peer centres do impose cash penalties. The open question is whether leaving Switzerland without a peer-level fine power is an accident of consensus politics, or a choice that suits a financial centre that prefers process to bite. The watchdog watches closely, within limits that counsel can price.

This field note draws on public legislation, regulatory publications, parliamentary records and court materials. It is provided for general information and is not legal or tax advice. Related live pieces: "FINMA: what it can and cannot do" and "When FINMA's reach stops at the border".

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