Supervision of supervisory organisations

SFMA licences and supervises supervisory organisations (SOs). The SOs are responsible for the ongoing supervision of independent portfolio managers and trustees.

Supervisory organisations must continue to satisfy the licensing requirements that apply to independence, fit and proper business conduct, organisation, governance, staff qualifications and available resources. They must also meet minimum financial requirements, and SFMA reviews and approves material changes to circumstances that were relevant to the licence.

Risk-oriented supervision

SFMA supervises supervisory organisations using a risk-based approach. It reviews whether the organisations properly monitor portfolio managers and trustees and whether legal requirements are being met. The annual risk analysis looks at the organisation’s business, risk profile, supervisory policy, governance, audit system, staffing and financial resources, and it determines which supervisory tools SFMA uses and how intensively they are applied.

Supervisory instruments

SFMA uses on-site supervisory reviews, regular bilateral supervisory discussions and analysis of the organisations’ annual reports. Each year, supervisory organisations also receive an assessment report identifying weaknesses and areas where further action is required.

Preparing for supervision

Supervised institutions should keep policies, records, reports, governance documents and evidence of controls current. Where material changes or incidents occur, they should assess notification duties early and maintain a clear audit trail for supervisory review.