The first of the disputed purchases took place in spring 2021 in a negative interest rate environment. It was clear from the telephone logs that the client should have been charged negative interests on her account balance due to the bank’s conditions. The client wanted to avoid such charges and discussed options with the client advisor. An investment in a liquid and low-risk investment was discussed and finally the fund was proposed, which was then acquired for the client. According to the bank, this was expressly intended as an interim solution, i.e. as an alternative for the account balance in order to avoid negative interest rates. The client had wanted to wait until she transferred further money before making the actual investments based on the investment advisory agreement. A specific purchase order from the client was not documented. There was no documentation at all on the second purchase of fund units at the end of 2021.

The client considered it to be an abuse of law for the bank to invoke the GTC clause regarding fictitious approval , according to which transactions are deemed to have been approved if no objection is raised within 30 days of receipt of the bank statement. Under the given circumstances, she had no reason and no obligation to monitor her account/deposit. In the client’s opinion, it was clear from the telephone log that the investment should have been delayed until she transferred further money. In the end, no such transfer took place and the banking relationship was terminated.

In addition, the client argued that no risk disclosure and information had been provided in relation to the investments, as would have been required under the MiFID II rules applicable to the client relationship due to her place of residence. She further stated that 95% of her assets were invested in a single fund in spring 2021, which represented a cluster risk. Finally, the risk category of the funds in question did not correspond to her client profile.

In its statement to the Ombudsman, the Bank reiterated its position that the acquisition of the funds was deemed authorized based on the relevant provisions in its GTCs. Based on the telephone log, it could, according to the bank, also be concluded that the client had actually ordered the purchase of the first fund in spring 2021 as an alternative to the account balance in order to avoid negative interest. According to her client profile, the client had confirmed that she had knowledge and experience of traditional investment funds. A “defense” strategy was defined in the investment advisory agreement. The controversial fund is a traditional investment fund in the risk category 3 out of 7. It has low volatility and is internally diversified. The purchase was therefore made in accordance with the client’s risk profile. The bank further argued that it is subject to Swiss legislation and Swiss law has been agreed for the client relationship. MiFID II is therefore, according to the bank, not applicable.

According to the bank, there were no discussion notes for the purchase of the units in the second fund at the end of 2021. However, the purchase had been agreed. The bank further invoked the clients duty to use the means available to them to monitor their account/deposit and to contact the bank in the event of errors and irregularities.

After receiving the statement, the Ombudsman discussed the case with the bank. He was somewhat surprised that securities purchases on this scale were not better documented, even assuming that the rules of MiFID II did not apply and the Swiss Financial Services Act was not yet in force. The Ombudsman advised the bank that, according to case law, invoking the fiction of approval can be an abuse of rights under certain circumstances. With regard to the purchase in spring 2021, the client’s interpretation of the telephone log in question that no investments should be made until further money is transferred seemed reasonable to him. With regard to the first purchase transaction, he therefore had certain doubts as to whether the fictitious approval could be validly invoked by the bank. With regard to the second purchase at the end of 2021, these doubts were serious.
In the end, the bank was prepared to compensate the client 50% for the losses from the first purchase and in full for those from the second purchase. The client accepted this settlement proposal.