FINMA’s portfolio-manager cases: keep the reason behind the recommendation

The brief

FINMA chief executive Stefan Walter’s 15 October speech reported 60 supervisory cases opened concerning Article 17 FinIA portfolio managers in 2025, compared with 32 in 2024 and seven in 2023. These are escalated supervisory cases, not a measure of fraud across the market. Read the speech.

Our analysis focuses on the explanation behind a recommendation. A client file should make it possible to follow the connection between the client’s circumstances, the proposed exposure and the decision that followed. A signed document alone does not answer every question about that reasoning. When work is outsourced, identify who reviews the result and who can explain it. The speech is a supervisory account, not a new October law or a product assessment.

The full record

Walter linked the cases to risks addressed in FINMA’s June guidance, including suitability, concentration and complex or illiquid products. He also stressed that outsourcing a function does not transfer responsibility. The cases concern a small part of the market; the figures should not be extrapolated into a misconduct rate. Source: FINMA’s 15 October address.

Our analysis: make the connection inspectable

Consider a reviewer who joins after an investment decision. The reviewer can see a risk questionnaire, product material and an approval. The missing connection may be why those particular facts supported that particular recommendation at the time. A useful record should point to that explanation without requiring the original adviser to recreate it from memory.

Our proposed review starts with one recommendation. Identify the client information used, the version of the product material considered and the explanation supplied to the client. Then locate the decision, any conditions and the person responsible for following them up. If the reason was supplied later, label it as a later explanation.

Record the unresolved question

An ambiguous client answer should remain visible until it is resolved. For example, a statement that money will not be needed “soon” may require clarification before a reviewer can understand an illiquidity decision. The point is not to prescribe a universal questionnaire. It is to preserve the question actually considered and the answer on which the decision depended.

For an outsourced review, distinguish the provider’s output from the firm’s acceptance of it. Record what the provider was asked to assess, any limitations in the response and who decided whether further work was needed. A delivered report should not automatically be marked as an approved conclusion.

A bounded exercise for the next review meeting

Choose an appropriately controlled case and ask an authorised colleague to reconstruct the decision. Record three kinds of difficulty separately: evidence that cannot be found, an explanation that was never recorded and a judgement that remains disputed. Each needs a different response; a faster search only addresses the first.

Finish by assigning the unresolved item and agreeing how its resolution will be documented. This exercise does not establish that a portfolio is suitable or that the firm has met every duty. It tests whether another responsible person can understand the basis and ownership of a decision. That is the specific formal communication question raised here.

Based on FINMA’s 15 October 2026 speech, read on 19 October. Counts refer to opened supervisory cases concerning Article 17 FinIA portfolio managers; they are not convictions, unique harmed clients or market prevalence. The speech revisits June guidance. No independent case-file review or control-effectiveness test was performed.

1. FINMA: Stefan Walter address, 15 October 2026