MiFID II Information
MiFID II Customer Information Document
1. Introduction
The European Union (EU) framework directive on markets in financial instruments (MiFID), in force since November 2007, was revised in light of changes in market structure and innovations in the financial markets, as well as as a result of the financial crisis (Directive 2014/65/EU, MiFID II). This revision was adopted on 15 May 2014. The aim of revising the harmonised legal framework for the provision of investment services and investment activities by financial services providers is, in addition to increasing market transparency, in particular to achieve enhanced investor protection. MiFID II is supplemented by a large number of delegated acts and guidelines specifying detailed requirements.
In Switzerland, the new Financial Services Act (FinSA; FIDLEG) entered into force on 1 January 2020 and governs customer protection in the provision of financial services. Schroder & Co Bank AG meets the requirements of FinSA by largely implementing the stricter EU standard of MiFID II. By way of derogation, FinSA provisions apply in particular in the following areas:
- Provision of documents
- Client classification
- Ex-ante disclosure of costs and incidental costs
- Granting of inducements
- Key Information Document
- Loss threshold reporting
- Affiliation to an ombudsman’s office
This MiFID II Customer Information Document provides you with an overview of Schroders’ implementation of the MiFID II conduct of business rules. It supplements any contractual agreement between you and Schroders. In the event of inconsistencies, the relevant contractual agreement shall prevail.
2. About Schroder & Co Bank AG
Schroders is a licensed Swiss bank under the Swiss Federal Act on Banks and Savings Banks of 8 November 1934 (the “Banking Act”). Our head office is located in Zurich. Our branch office is located in Geneva.
As a Swiss financial services provider, we are subject, in addition to the Banking Act, inter alia to the provisions of FinSA.
We provide banking, financial and advisory services with a national and international focus, in particular discretionary portfolio management and investment advisory services for private clients and professional clients.
Schroders is ultimately a wholly owned subsidiary of Schroders plc, London. Schroders plc is listed on the London Stock Exchange and is a constituent of the FTSE 100 Index.
For further information about our services, please contact your client adviser (hereinafter the “Client Adviser”) or contact us at:
Schroder & Co Bank AG
Talstrasse 11 (Schanzenhof)
CH-8001 Zurich
Switzerland
Telephone: +41 44 250 11 11
Email: contact@schroders.ch
Schroder & Co Banque SA
Rue Jargonnant 2
CH-1207 Geneva
Switzerland
Telephone: +41 22 818 41 11
Email: contact@schroders.ch
3. Supervisory authority
Schroders is authorised by the Swiss Financial Market Supervisory Authority (FINMA) and is prudentially supervised by it.
Contact details:
Swiss Financial Market Supervisory Authority FINMA
Laupenstrasse 27
CH-3003 Bern
Switzerland
Telephone: +41 31 327 91 00
Email: info@finma.ch
Website: www.finma.ch
4. Client segmentation
4.1 General information
Under MiFID II regulatory requirements, banks are obliged to categorise their clients, based on legally defined criteria, into the categories “retail client”, “professional client” or “eligible counterparty”. The classification serves to ensure that our clients are treated in a manner aligned to their knowledge, experience with financial instruments, and the nature, frequency and volume of such transactions.
All new clients are informed of their classification. Existing clients are informed only if their pre-existing classification changes. You may change your segmentation by submitting an opting-in or opting-out declaration; this will also change the level of client protection and the conduct of business obligations applicable to the client relationship. Your Client Adviser will be pleased to explain the opting-in and/or opting-out options available in detail. An opting-in or opting-out declaration becomes legally binding for Schroders only once it has been confirmed in writing to the client (see section 4.5 Reclassification).
Any segmentation carried out by Schroders generally applies to all financial services and product classes within a client relationship that we offer to you or provide for you.
We ask you to inform us without delay of any relevant changes to the circumstances underlying your segmentation that may result in you no longer meeting the requirements for classification as a professional client, or if you wish to withdraw your opting-in or opting-out declaration.
As soon as we become aware that you no longer meet the criteria for your original classification, we will adjust your classification and inform you accordingly. In such cases, Schroders is entitled to return, exchange or sell any financial instruments that may only be held by clients of the original classification, to terminate financial services agreements, or to cease providing financial services in the future.
4.2 Retail clients
As a rule, all clients are classified by Schroders as retail clients. With this classification, you benefit from the highest level of protection provided for by law.
4.3 Professional clients
For Schroders to treat you or your company as a professional client, the criteria pursuant to MiFID II regulatory requirements must be met. Professional clients benefit from a lower level of protection than retail clients. For professional clients, we may assume, in accordance with legal provisions, that the persons acting have sufficient experience, knowledge and expertise to make investment decisions and to assess the associated risks appropriately.
4.4 Eligible counterparty
Under MiFID II regulatory requirements, eligible counterparties include, in particular, authorised or regulated legal entities, larger undertakings, as well as governments, central banks and international or supranational organisations.
They benefit from the lowest level of protection. For this client category, too, we assume under the legal provisions that the persons acting have sufficient experience and knowledge as well as adequate expertise to make investment decisions and to assess the associated risks appropriately. We do not provide investment advisory or discretionary portfolio management services to such clients. If a client classified as an eligible counterparty nevertheless wishes to make use of such services, we will treat them as a professional client.
4.5 Reclassification
The client may at any time apply to the Bank in writing to be reclassified from “retail client” to “professional client” (upgrade). Please note that a change in classification is also associated with a change in the level of protection provided for by law and applicable to the client. The Bank may agree to an upgrade only if at least two of the following conditions described in the MiFID II regulatory requirements are met:
- Over the previous four quarters, you have carried out on average ten transactions per quarter of significant size on the relevant market.
- You hold cash and financial instruments with a value exceeding EUR 500,000.00.
- You have worked for at least one year in a professional position in the financial sector that requires knowledge of the intended transactions or services.
The Bank is free to reject such an application even if the above criteria are met.
The client also has the option at any time to request in writing that the Bank reclassify them from “professional client” to “retail client”.
Your Client Adviser will be pleased to explain the precise modalities and effects of a reclassification. These modalities and effects will be set out in a written agreement with you.
It is your responsibility to inform us of any changes that could affect your classification. If we conclude that you no longer meet the conditions of the client category into which you are classified, we are obliged to take action and make an adjustment. We will inform you immediately in such a case.
5. Appropriateness & suitability
5.1 General
To assess appropriateness and suitability, Schroders relies on collecting comprehensive and accurate personal information from clients. Schroders relies on the information and details provided by you or by a person authorised by you. You or your authorised representative are also required to inform Schroders immediately of any change or update to your personal information that was collected as the basis for performing the appropriateness or suitability assessment. Please note that without complete and accurate personal information from you, Schroders will not be able to perform the appropriateness or suitability assessment.
5.2 Retail clients
Financial services providers that provide investment advisory services or portfolio management services to retail clients must carry out an appropriateness or suitability assessment.
a. Appropriateness assessment
Where investment advice is provided for individual transactions (transaction-based investment advice) without taking the overall client portfolio into account, Schroders must enquire about the client’s knowledge and experience. Before making a personal recommendation, we must then assess whether the recommended financial instrument is appropriate for the client, taking into account the client’s knowledge and experience.
Through appropriate information and explanation, Schroders may be able to compensate for insufficient knowledge or experience.
b. Suitability assessment
For investment advice that takes the client portfolio into account (portfolio-based investment advice) or for discretionary portfolio management, Schroders must enquire about the client’s personal and financial circumstances, investment objectives, and the client’s knowledge and experience in relation to the intended financial service (portfolio-related investment advice or portfolio management).
Based on the information collected from you, Schroders prepares a risk profile and, on that basis, agrees an investment strategy with you. The intended financial service is suitable for you if, with regard to the agreed investment strategy and the stated financial circumstances, the financial service appears appropriate and you understand the product and the associated investment risks and are willing to accept them.
5.3 Professional clients
For professional clients, MiFID II requires financial services providers that provide investment advisory or discretionary portfolio management services to perform only a limited suitability assessment.
For professional clients, Schroders may generally assume that such clients have the necessary knowledge and experience and that the investment risks associated with the financial service are financially bearable. For professional clients, we are generally obliged to capture investment objectives and conduct a limited suitability assessment only in the case of discretionary portfolio management services or investment advice that takes the client portfolio into account (portfolio-based investment advice).
6. General risks of financial instruments
Investments in financial instruments offer opportunities, but also involve risks. It is important that you know and understand these risks before using a financial service.
For this purpose, the Swiss Bankers Association (SBA) brochure “Risks Involved in Trading Financial Instruments” is made available on our website www.schroders.com/de-ch/FIDLEG.
The brochure contains information on the typical characteristics and risks of commonly used financial instruments. You can also obtain a current copy of the brochure from your Client Adviser upon request.
Please read this information carefully. If you have questions and/or would like further information, please contact your Client Adviser.
7. Information on costs and fees
In connection with the provision of financial services, costs and fees may arise both at Schroders and at third parties (e.g. external custodian banks). Our current costs and fees are set out in the applicable schedule of fees, which you can find on our website www.schroders.com/de-ch/FIDLEG or obtain at any time from your Client Adviser. Costs and fees charged by third parties will also be charged to you.
7.1 Ex-ante disclosure
In addition to the costs and fees charged to you directly by Schroders, costs and fees may also arise that are charged to you indirectly, e.g. ongoing fund fees which reduce the fund’s return. You can find these costs and fees in the relevant contractually agreed documentation.
The Bank is obliged to disclose in advance (ex ante) the costs and incidental costs of both investment services and ancillary investment services (service costs) as well as the costs related to the structuring and management of the financial instruments (product costs).
If the Bank’s costs are not known precisely, they are disclosed on the basis of estimates. For discretionary portfolio management mandates, disclosure is made at service level. Under certain conditions—particularly if you are classified as a professional client—the Bank may provide disclosure in a generalised and standardised form. Clients of Schroder & Co Bank AG who are domiciled outside the EU / EEA receive the ex-ante disclosure in the form of the general price brochure in accordance with FinSA. The investment services and ancillary investment services are governed by our price brochures.
7.2 Ex-post disclosure
In addition to the transaction statement set out in the chapter “Client statements and reporting”, the Bank discloses the actually incurred service and product costs in any event subsequently (ex post), at least annually in aggregated form. The ex-post presentation may differ from the ex-ante estimate. For ex-post cost disclosure, the Bank also relies on data provided by product providers and information service providers, which may use different billing cut-off dates, different prices (e.g. average daily prices or exchange closing prices) and, in relation to foreign currencies, different conversion rates and times.
8. Loss threshold reporting
If you have granted a discretionary portfolio management mandate, we will inform you if the total value of your portfolio—compared with the last portfolio management report—falls by ten per cent, and subsequently upon each further decline in value in increments of ten per cent.
Such notification will be made at the latest by the end of the business day on which the threshold is exceeded. If that day falls on a non-business day, notification will be made by the end of the following business day. If you are classified as a retail client and your portfolio contains leveraged financial instruments or transactions with contingent liabilities, you will receive a loss notification when the initial value of such a financial instrument falls by ten per cent, and upon each further decline in value in increments of ten per cent. Such notification will be made at the latest by the end of the business day on which the threshold is exceeded. If that day falls on a non-business day, notification will be made by the end of the following business day. The loss notification is made on an individual instrument basis.
9. Information on financial services
9.1 Products
Standardised information on financial instruments (e.g. funds/ETFs, structured or securitised products), including information on product-specific risks and costs, can be found in the relevant product information documentation. The Key Information Document (KID) for a financial instrument is provided to our private clients in investment advice free of charge before each transaction, provided it is made available by the product manufacturer. Product information is also available at any time from your Client Adviser upon request.
9.2 Portfolio overview
Schroders’ reporting to you on your portfolio is carried out in accordance with the contractual agreements, but at least once a year.
9.3 Key Information Document (KID)
The information in the KID enables investors to make an informed investment decision and to compare different financial instruments. This is not advertising. KIDs are available for packaged retail and insurance-based investment products.
A KID contains key information and informs investors about the following:
- the name of the financial instrument and the identity of the person preparing it;
- the type and characteristics of the financial instrument;
- the risk and return profile of the financial instrument, stating the maximum loss of the invested capital that investors may incur;
- the costs of the financial instrument;
- the recommended minimum holding period and the tradability of the financial instrument;
- information on authorisations and approvals associated with the financial instrument.
If a PRIIP KID is not available under European law, clients of Schroder & Co Bank AG will receive, for packaged investment products, a KID in accordance with the requirements of FinSA.
10. Market offering considered
In providing financial services (including discretionary portfolio management), Schroders uses or offers both financial instruments issued, developed, managed or controlled by an affiliated company of the Schroder Group (in particular collective investment schemes) as well as financial instruments from third-party providers.
11. Best Execution
When executing client orders, we ensure that the best possible result is achieved for you in financial, time and quality terms.
We have taken all reasonable steps to achieve the best possible result when we execute transactions in financial instruments for you via other companies affiliated with Schroders or via third-party brokers.
Schroders has a framework for the handling and execution of orders based on the Schroder Group Order Management and Execution Policy. This framework covers all discretionary portfolio management activities, including order handling and the execution of transactions through to the allocation of executed orders.
The framework and the rules on order handling and execution are reviewed regularly for completeness and effectiveness. You can find our Best Execution Policy at www.schroders.com/de-ch/FIDLEG.
As a rule, we apply the same best execution principles to all our clients, unless a client expressly instructs us otherwise.
12. Conflicts of interest
Schroders has implemented appropriate organisational and administrative measures to prevent or mitigate conflicts of interest that may arise from the provision of financial services and that may pose a risk to the interests of our clients or could lead to disadvantage.
A conflict of interest arises when the interests of one party (e.g. Schroders, a member of the Board of Directors, a member of senior management, an employee, a client, or an affiliated company of Schroders) do not match the interests of another party, or might not match them in the future. This may result in one party being disadvantaged for the benefit of another party.
A conflict of interest arises when the interests of one party (e.g. Schroders, a member of the Board of Directors, a member of senior management, an employee, a client, or an affiliated company of Schroders) do not match the interests of another party, or might not match them in the future. This may result in one party being disadvantaged for the benefit of another party.
A range of controls ensures that our policies and framework on conflicts of interest remain appropriate and are complied with. Please contact us if you have questions about our policies and the framework for preventing conflicts of interest.
13. Economic ties to third parties
Schroders is a wholly owned subsidiary of Schroders plc, London. We work in various ways with companies of the Schroder Group in Switzerland and abroad. The Schroder Group conflicts of interest framework, which applies to all Schroder Group companies, includes measures to prevent and manage potential conflicts of interest between group companies in order to ensure appropriate internal conflict management.
If Schroders’ ties to other companies of the Schroder Group or other third parties lead to a conflict of interest in connection with the provision of a financial service to you, and such a conflict of interest cannot be eliminated or mitigated, we will inform you of this in an appropriate manner.
14. Removal of financial incentives
The Bank removes any direct link between the remuneration of relevant persons whose activities on behalf of the client could give rise to a conflict of interest.
The Bank reserves the right, within the legal provisions applicable to it, to grant inducements to third parties for the acquisition of clients and/or the provision of services. The assessment basis for such inducements may include, in particular, the commissions, fees, etc. charged to clients and/or (in the case of Schroder & Co Bank AG only) assets or components of assets placed with the Bank. The amount of such inducements typically corresponds to a percentage of the respective assessment basis. The Bank will disclose the amount of inducements granted in the course of providing the service. Upon request, the Bank will disclose further details at any time regarding the agreements entered into with third parties in this respect.
Where the Bank provides discretionary portfolio management services, it does not accept inducements from third parties, or passes them on to the client. The client acknowledges and accepts that, in the context of order execution in financial instruments (execution only and non-advised business), the Bank may accept and retain inducements, provided that these improve the quality of the service to the client and do not lead to a conflict of interest.
The Bank will disclose the amount of inducements retained in the course of providing the service. Such retained inducements may be granted by third parties (including group companies) in connection with the acquisition or distribution of collective investment schemes, certificates, notes, etc. (hereinafter: products, which also include those managed and/or issued by a group company) in the form of trail commissions and placement/initial commissions (e.g. from subscription and redemption fees). The amount of such inducements varies depending on the product and provider. Trail commissions are generally calculated based on the volume of a product or product group held by the Bank. Their amount typically corresponds to a percentage of the management fees charged to the relevant product and is paid periodically during the holding period. Placement/initial commissions are one-off payments. Their amount corresponds to a percentage of the relevant issue and/or redemption price. In addition, distribution commissions from securities issuers may be granted in the form of discounts on the issue price (rebate) or paid as one-off payments, the amount of which corresponds to a percentage of the issue price.
15. Complaints management / Ombudsman contact
At Schroder & Co Bank AG, the satisfaction of our clients is always our highest priority. Our clients’ trust in the reliability of the Bank and in the quality of the services provided is an indispensable prerequisite for a successful, long-term relationship.
Occasionally, it may happen that we do not meet your expectations to your complete satisfaction. In such cases in particular, we would like to invite every client to enter into dialogue with us. We take all feedback seriously and always regard complaints as an opportunity to improve our services and thus to address your interests even more specifically. Should there be any cause for dissatisfaction or complaint, you may contact your relationship manager in person, by telephone, in writing or electronically. If you do not have a relationship manager or if they are unknown to you, our complaints management function is available to you directly. Your matter will be examined in detail and our complaints management function will endeavour to find a solution promptly. The following principles apply to us when handling complaints:
- When handling a complaint, we use clear, easily understandable and non-misleading language.
- We take your matter seriously and process it as quickly as possible. As a rule, you will receive an acknowledgement of receipt within 7 working days.
- Upon request, we will inform our clients immediately about the status of complaint handling.
- Our clients will be informed promptly about unavoidable delays in handling complaints.
- Every complaint from our clients will be answered conclusively. The response is provided on a durable medium.
- We take all reasonable measures and precautions to receive and handle complaints objectively and fairly.
- We review our complaints management procedure regularly and as needed to meet all relevant legal requirements.
- Submitting complaints is free of charge. Ensuring client satisfaction is our top priority.
All details of complaints are electronically recorded in accordance with applicable legal provisions and retained for at least 5 years.
Clients of Schroder & Co Bank are, under MiFID II, entitled at any time to receive a copy of their file as well as all other documents relating to them that the banks have prepared in the context of the business relationship.
If you wish to assert such a right, please submit a corresponding request in writing. The banks will provide you with a copy of the relevant documents free of charge within 30 days of receipt of the request.
Contact details for the complaints management function
Schroder & Co Bank AG
Roberto Llanderrozas
Head of Compliance / Complaints Management
Talstrasse 11 | CH-8001 Zurich
T +41 (0)44 250 13 02
Email: Roberto.Llanderrozas@Schroders.com
If you have further questions about our complaints management procedure, please contact our complaints management function.
If you do not agree with our response, you may refer your matter to an alternative dispute resolution body. You are of course also free to refer the matter to a competent court. Unlike courts, alternative dispute resolution bodies do not charge fees for handling your request.
Schweizerischer Bankenombudsman
Bahnhofplatz 9 | Postfach | CH-8021 Zurich
Telefon Monday to Friday 8.30–11.30
T +41 (0)43 266 14 14 German / English
T +41 (0)21 311 29 83 French / Italian
F +41 (0)43 266 14 15
www.bankingombudsman.ch
Complaints may also be addressed to the Swiss Financial Market Supervisory Authority (FINMA), which supervises Schroder & Co Bank AG.
Legal information
This MiFID II Customer Information Document is provided to you for informational purposes only and for regulatory reasons and is intended to give you an overview of how Schroder & Co Bank AG implements the statutory conduct of business obligations. This document does not constitute marketing material.
Despite careful review, Schroder & Co Bank AG assumes no liability for the appropriateness, accuracy, completeness or correctness of the content of this MiFID II Customer Information Document, in particular because certain details may change after publication.
This MiFID II Customer Information Document reflects the status as at 1 January 2022 and may be updated unilaterally by Schroder & Co Bank AG at any time without further notice to clients. You can always obtain the most up-to-date version of the MiFID II Customer Information Document from your Client Adviser at Schroder & Co Bank AG. After 1 January 2022, the most up-to-date version of the MiFID II Customer Information Document can be downloaded from our website https://www.schroders.com/de-ch/ch/rechtliche-informationen/.
This MiFID II Customer Information Document does not constitute an offer or solicitation by Schroder & Co Bank AG to make use of any service, to buy or sell financial instruments, or to participate in any particular trading strategy in any jurisdiction.