Swiss Banks Sometimes Overstep on Tax Compliance, Ombudsman Says

Swiss banks sometimes go too far to ensure their foreign clients comply with tax rules, potentially causing “very unpleasant consequences,” Swiss Banking Ombudsman Marco Franchetti said.

Measures banks took ranged from increasing fees to terminating relationships with clients abruptly, Franchetti said at a news conference in Zurich today. Banks often cite instructions by the banking regulator to analyze legal risk as a reason for the steps, he said.

“Sometimes we find banks also exaggerate,” Franchetti said. “For instance when the bank refuses to pay the balance of an account of a non-French EU citizen who lives in France to a bank in his home country and insists on paying it into an account in France.”

The ombudsman, backed by a foundation established by the Swiss Bankers Association, acts as an independent mediator in disputes between Swiss banks and their customers. Franchetti has served in the post since last July.

Franchetti said the environment in which Swiss banks operate changed in recent years, leading to fundamental decisions on whether and under what conditions relationships with clients in certain countries should continue.

Termination of client relationships can be particularly problematic when banks close accounts and then seek early repayment of corresponding fixed-term loans or investments, the ombudsman said.

Franchetti said he does not comment on the actions of individual banks.

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