On 12 August 2026, the Swiss Federal Council launched a revision of the Swiss Banking Act and Liquidity Ordinance. The consultation period runs until 19 November 2026. One of the five main measures consists in the introduction of a senior managers regime (SMR). The proposed regime introduces a formal ex-ante allocation and documentation of individual responsibilities and establishes a statutory individual duty of care. It builds on the existing fit-and-proper framework rather than creating a separate supervisory system. While foreign accountability regimes, such as the UK Senior Managers Regime, have served as important reference points for the proposed Swiss SMR, the Swiss proposal does not simply replicate any such foreign regime. Rather, it adapts key elements of such regimes to the existing Swiss regulatory framework.
Banks in scope
The SMR does not apply to all banks, but only to those with a larger and more complex organisational structure (Complex Organisations). The Federal Council will define what exactly a Complex Organisation means in the Banking Ordinance. According to the definition outlined in the explanatory report of the Federal Finance Department (FDF Report), banks with 250 full-time equivalents or more will be subject to the SMR. This figure is based on the criterion for small and medium-sized enterprises (SMEs) as used by the State Secretariat for Economic Affairs (SECO). According to the FDF Report, banks with headcounts of around 250 full-time equivalents will not be required to comply with the accountability regime until it is determined that their headcount will remain permanently above the threshold. Furthermore, the FDF Report mentions that the definition of a Complex Organisation may change over time and could be adjusted by the Federal Council. Also, FINMA may impose the SMR on additional banks as an organisational supervisory measure. A more conclusive determination of the banks subject to the SMR will only be possible once the relevant provisions in the Banking Ordinance are available in draft form.
The new statutory duty of care applies to the persons that are subject to the fit-and-proper test at all banks. In this regard, one element linked to the SMR affects all banks.
Individuals in scope
Once a bank falls within the scope of the SMR, the question arises which persons acting for that bank are subject to the regime. These are the members of the administrative and executive bodies of a bank, which are the persons that have been traditionally subject to the fit-and-proper test.
Other persons, however, who exert significant influence over the management, the risks or the internal control system of a bank will also be included. According to the proposal, these are specifically the individuals heading the following areas or functions:
internal audit;
risk management; compliance with legal and internal regulations (compliance function);
operational processing (operations function);
finance; and
information and communication technology.
Two more general clauses further include:
- Persons who head significant business units, who are also subject to the SMR. The Federal Council will define what "significant" means in the Banking Ordinance. According to the FDF Report, a business unit will be considered significant if it contributes at least 10% to the bank’s gross revenue.
- Key functions not already covered by the areas and functions described above may also be captured. Such functions are specific to each institution and can vary depending on the situation. They may include functions that are relevant to risks but have little or no impact on earnings. The FDF Report cites the treasury function or, at global systemically important banks, as a rule, the entire hierarchical level below the executive management level. Beyond that, the Federal Council will define the relevant criteria in the Banking Ordinance.
Unless FINMA orders otherwise, a person subject to the SMR may assume responsibility for more than one in-scope function, provided that the separation between the first line of defence (e.g. business units), the second line of defence (e.g. risk control, compliance) and the third line of defence (e.g. internal audit) is maintained.
Furthermore, where a bank has outsourced material functions or parts thereof, the outsourcing does not remove the function from the scope of the SMR. Rather, the bank must assign responsibility for overseeing the outsourced activity to an existing person subject to the fit-and-proper requirement. In the case of the internal audit function, oversight of the outsourced activity must be assigned to a member of the board.
Details on the functions that will ultimately be subject to the SMR will not be known until the proposal for the amended Banking Ordinance is issued.
Fit-and-proper test
All such individuals falling within the SMR at Complex Organisations will be subject to the Swiss fit-and-proper framework (Gewähr für eine einwandfreie Geschäftstätigkeit). They must satisfy the applicable requirements relating to proper business conduct, good reputation and the professional qualifications required for their respective function. The appointment of a person to a position subject to the fit-and-proper requirement requires prior FINMA approval, including a FINMA assessment whether the relevant requirements are met. A newly appointed person may take office only upon FINMA’s approval.
In a nutshell, the proposed legislation does not materially alter the substance of the existing fit-and-proper test but expands it at Complex Organisations from the members of the administrative and executive bodies to all individuals subject to the SMR. The fit-and-proper test on the level of the direct and indirect shareholders and the institution/bank remains unchanged, albeit the latter will be expressly included in the Banking Act according to the proposal.
Allocation of responsibilities
The core of the new SMR is the duty to document the allocation of responsibilities through a firm-wide responsibility overview and individual responsibility statements.
Complex Organisations are required to identify the responsibilities relevant to their operations and assign them to the appropriate responsible individuals. They must maintain an overview of the departments and functions that identifies the responsible individuals and clearly allocate their duties. The starting point for such an overview can be the bank’s existing organisational chart.
In the statements of responsibility, the individuals subject to the SMR confirm that they are responsible for the tasks assigned to them based on their respective roles and areas of responsibility. They must sign the statement whereby digital signatures are permitted under certain circumstances. By signing, the individuals confirm that they are responsible for fulfilling these tasks. Living up to such responsibilities is encompassed in the newly introduced duty of care.
The details of the firm-wide responsibility overview and the individual responsibility statements will be provided for in the Banking Ordinance.
New statutory duty of care
Complementary to the SMR, a new statutory duty of care is proposed. This new duty of care does, however, not only apply to the extended group of individuals subject to the fit-and-proper test at Complex Organisations in scope of the SMR (see above). It extends to all individuals subject to the fit-and-proper test at all banks.
The proposed duty of care incorporates and specifies for banking law the requirements regarding due care set forth in the Swiss Code of Obligations for directors of Swiss stock corporations. The rule remains generic, stating that the persons subject to it must perform their duties with all due care. Slightly more specifically, the proposal also stipulates that the persons must ensure compliance with applicable law and internal regulations within their area of responsibility.
If the duty of care has been breached, banks will be the first to levy sanctions. Persons who demonstrably violate the duty will particularly be subject to measures by the banks affecting their variable compensation or disciplinary actions. However, FINMA may also penalise a serious breach of the duty of care, using the supervisory instruments at its disposal, including professional bans.
The duty of care does not entail an automatic mechanism whereby a violation of supervisory regulations or internal company policies is directly attributed to the person subject to the duty within its area of responsibility (i.e. there is no vicarious liability). Rather, when taking action, the bank or FINMA must provide evidence of a breach by the persons subject to the duty.
Ultimately, the duty of care and the sanctions for breaches of that duty are the necessary counterpart to the allocation of responsibilities under the SMR since they provide the means to sanction failures to live up to those responsibilities.
Outlook
The proposed SMR introduces new tools but is also embedded in existing concepts of Swiss banking law, particularly the fit-and-proper framework. The SMR also has its critics, above all those claiming that the introduction of a dedicated SMR is not needed and the desired results could also be achieved by targeted refinements to the existing Swiss supervisory framework. Furthermore, in particular the exact scope of the banks and persons subject to the SMR must be clarified in the Banking Ordinance.
The legislation procedure will show whether and in what form an SMR will become effective. Such a procedure may take several years. If and once the SMR and duty of care become effective, the affected banks will have one year after the entry into force of the rules to implement the necessary changes.
For more information on these proposed regulations and Switzerland’s banking sector, contact your CMS client partner or the CMS expert who wrote this article.
