The Swiss Financial Market Supervisory Authority has published guidance setting out recurring risk patterns it has identified in escalation cases involving the use of products in individual portfolio management. The guidance is aimed primarily at portfolio managers licensed under Article 17 of the Financial Institutions Act, but it is also relevant to other supervised institutions that provide discretionary portfolio management. It restates that firms must apply client-focused conduct rules, risk management and governance requirements consistently, particularly when using complex, high-risk or illiquid products for retail clients. The cases reviewed by FINMA involved products such as foreign funds without equivalent supervision, structured products including actively managed certificates, and securities issued by foreign unregulated issuing or structuring companies. FINMA found repeated shortcomings in suitability assessments, alignment with clients' risk capacity and risk appetite, risk disclosure, portfolio concentration, management of conflicts of interest linked to in-house products, and due diligence on valuation, liquidity and other product risks. It also flagged weaknesses where smaller firms outsourced risk management or compliance controls in a way that created standardised checks, unclear responsibilities and control gaps. In 2025, supervisory organisations escalated 34 cases to FINMA and third-party reports triggered a further 34, bringing the total number of supervisory cases opened to 68, up from 34 in 2024 and 9 in 2023. Against that backdrop, FINMA also said it has identified weaknesses in supervisory organisations' authorisation and oversight of audit firms and in their follow-up of audit findings. It has ordered measures to strengthen ongoing supervision and will continue to monitor their implementation and progress.

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