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FinTechs belonging to this category act as a loan creditor (even short and very short-term loans), are broking loans or receivables or conduct factoring of loans, which were given to private or business customers. In this business area you also find “peer-to-peer” (P2P) services, in which FinTechs enable a multitude of users to give loans (and brokered by the FinTech-platform) to other users or companies.
Finetrading is hereby a financial service of FinTechs, where they buy due receivables and grant the debtor an extension of payment time.
As an ancillary service some FinTechs offer alternative credit assessment services to check the solvency of a borrower.
Introduction
Attitude of the country towards loan-giving-, factoring-, brokerage-, finetrading- and ancillary services
The social and political climate in Switzerland is positive, although according to a study of HSLU on private debt of 2019, approx. two-third of the SME in Switzerland are financed by equity capital.
Credits granted to individuals for the purpose of purchasing consumer goods and leasing cars increased. On the other hand, law makers protect individuals (consumers) by regulating the granting of loans for purchasing of consumer goods separately (i.e. the Consumer Credit Act). This in particular in order to protect consumers from over-indebtedness.
Legal affairs
Obligations and requirements to provide loan-giving-, factoring-, brokerage-, finetrading, and ancillary services described above
According to the BankA, a banking license requirement may also be triggered not only if deposits are taken from the public (see above) but also if the lending business is conducted and if at the same time the respective provider of lending services refinances itself to a significant extent with several banks that do not have a stake in the service provider. According to the BankA, the relevant lending business is conducted by “anyone who finance for his own account in any manner whatsoever an indefinite number of persons or enterprises with which he does not form an economic unit". In addition to traditional loans and credits, all forms of granting financial support may fall under the concept of financing, in particular also the factoring business. However, in order to trigger bank license requirements, it is further required that the respective service provider is mainly active in the financial sector and that it refinances itself to a considerable extent with several banks that do not have a significant stake in it. According to a rather old practice of FINMA, the term “substantial extent” is understood as an average amount of the last four quarterly balance sheets of more than CHF 500 Mio. And “several banks” is understood to mean more than five banks not affiliated with the borrower. It seems that currently no factoring company in Switzerland meets these requirements and, hence, is subject to the BankA.
In addition, any person who accepts, holds, or helps to invest or transfer third-party assets, in particular persons who engage in the credit business (including in the form of factoring or finance leasing) are considered financial intermediaries subject in principle to the anti-money laundering regulation in Switzerland if conducted on a professional basis. The provider of such services as financial intermediary has to become a member of an SRO. However, according to the practice of FINMA, trade finance is excluded from the application of the anti-money laundering regulation, if the repayment is not made by the contracting party. In case of factoring, i.e. if the factor assigns receivables from a creditor’s business operations in return for payment and the receivable due is then collected from the respective debtor, such is not subject to anti-money laundering law due to the change of creditor and due