FECIF - The European Federation of Financial Advisers and Financial Intermediaries

Editorial - June 2019

CEDR Accredited Mediator, Honorary Member of GSCGI and an Independent Financial Advisor at ACTION FINANCE SA

Dispute resolution – the Swiss way.

In Switzerland, mediation will become mandatory in disputes relating to asset management and financial advice as set by the new Financial Acts FinIA and FinSA that will come into effect on January 1st 2020.

What’s new?
Switzerland often successfully acts as Mediator in settlements of international conflicts. However, the use of out-of-court procedures is also encouraged for the resolution of civil law disputes between private parties. Priority is given to the peaceful settlement of disputes since the solutions found in transaction are more viable and cost efficient as they take into account all circumstances of the conflict and not only its legal and procedural sides.*

Albert Einstein was asked during WW2 where he would take refuge if a nuclear war started in Europe. He answered that he would go to Switzerland. “How come?” the journalist asked, as Switzerland is situated in the middle of Europe? Albert Einstein replied: because everything takes 50 years to arrive to Switzerland.

Albert Einstein would be surprised today to learn that it took less than 10 years for the Swiss federal legislator to enforce mandatory Mediation for its financial sector. Indeed, the year 2011 was a landmark year for the growth of mediation in Switzerland and abroad for all civil and commercial matters. On the domestic front, the new Swiss Code of Civil Procedure (the “CPC”) came into effect on January 1st, 2011, recognizing Mediation as a new form of dispute resolution nationwide in addition to litigation, arbitration and conciliation.  At an international level, 2011 also marked the year that the European Directive 2008/52 on Certain Aspects of Mediation in Civil and Commercial Matters came into force (the “EU Directive”).

Already, in 1992, the banks in Switzerland had established a Swiss Banking Ombudsman whose mediation process is a conciliatory one, similar to that prevailing at the AMF in France or the Financial Ombudsman in the UK. But this service is not available to the clients of Asset Managers or Independent Financial Advisors.

A unique opportunity
Therefore, the Swiss private market forces now face a unique opportunity to design a very efficient mediation structure and process as they have to build from scratch a single or several Mediation Organism(s) for the clients of the approximately 2,500 Independent Financial Advisors and 220 Managers of Collective Assets who will have an obligation to be registered with this/these Mediation Organism(s) which, in turn, need to be approved by the Swiss Federal Department of Finance. In addition to this requirement, the legislator demands that any Mediator selected to be on the list of the Mediation Organism must possess not only an accreditation as a Mediator, but also a high level of professional expertise in money management and financial matters.

According to the definition of the Mediation Directives of the Swiss Bar Association adopted in 2005, mediation is an out-of-court procedure of dispute resolution where one or several independent and impartial third parties (mediators) help the parties to a conflict to settle it peacefully through negotiations. 

The Swiss Rules of Commercial Mediation adopted by the Swiss Chambers of Commerce and Industry in 2007 define mediation as an alternative method of dispute resolution whereby two or more parties ask a neutral third party, the mediator, to assist them in settling a dispute or in avoiding future conflicts.

The mediator facilitates the exchange of opinions between the parties and encourages them to explore solutions that are acceptable to all the participants. Unlike an expert, the mediator does not offer his or her own views, nor does he or she make proposals like a conciliator, and unlike an arbitrator, he or she does not render an award.

Therefore mediation is conducted in order to help the parties to choose their own solution acceptable for all of them and avoiding a solution imposed from the outside, as mediators help the parties to restore a constructive dialog.

The basic principles applicable to mediation are: (1) voluntary participation in the procedure and the possibility to discontinue it at any time; (2) neutrality and independence of the mediator; (3) qualification of the mediator and (4) confidentiality of the procedure and of the representations.

Mediation is a quick and efficient dispute resolution method, inexpensive in comparison with court and arbitration proceedings. It allows the parties to settle their conflict to their mutual satisfaction with the assistance of an independent third party, and to preserve their relationship for the long-term prospective. Practice shows that use of mediation in resolution of commercial conflicts between the representatives of different countries and cultures brings very good results (the statistics worldwide usually show a positive result of 80%).

I am involved in the setting up of one Mediation Organism in Switzerland (FINSOM, (www.finsom.ch) and I look forward positively to receiving from the representatives of the Association members of FECIF, and/or directly from any Financial Advisors, information about the flaws that they have encountered in their mediation processes.  Indeed, their experiences will assist the Financial Advisors and Asset Managers in Switzerland to build an efficient Mediation Organism.

I am certain that GSCGI (Groupement Suisse des Conseils en Gestion Indépendants, www.gscgi.ch), also known as the Swiss Association of Independent Financial Advisors (SAIFA), Schweizeriche Vereinigung Unabhängiger Finanzberater (SVUF) and Associazione Svizzera dei Consulenti Finanziari Independenti (ASCFI) will take the lead and propose to FECIF a new way forward in Mediation that can set an inspiring example to many of its members.

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