The Swiss Federal Supreme Court further consolidates its landmark case law on retrocessions in execution-only relationships. In two further decisions published on 22 July 2026 (4A_501/2025 and 4A_503/2025 dated 17 June 2026), the Supreme Court confirmed that banks are not required to return retrocessions received in execution-only relationships as long as there is no conflict of interests.

We are pleased to have successfully represented the bank in both of these proceedings.

No Duty of Restitution

Following its landmark ruling in January 2026 (which we analyzed in our February Newsflash, Retrocessions - Supreme Court confirms no duty to return retrocessions in execution only relationship), the Federal Supreme Court reaffirmed that the obligation to account for and return benefits under Article 400 of the Swiss Code of Obligations (CO) cannot be detached from the underlying purpose of the mandate relationship. Such duty arises only where the third-party remuneration is capable of creating a concrete conflict between the interests of the client and those of the bank.

In execution-only relationships, where the bank merely executes the client's investment instructions without offering advice or managing the portfolio, the mere receipt of third-party remuneration does not, by itself, create such a conflict of interests. In the absence of such a concrete conflict of interests, no duty of restitution arises under Article 400 CO, regardless of whether a valid waiver exists.

In this respect, the Federal Supreme Court dismissed doctrinal criticism levelled against its recent case law, clarifying that the existence of a conflict of interests is the central criterion of the analysis, rather than a subsidiary consideration in determining whether the remuneration is sufficiently connected with the performance of the mandate (lien intrinsèque). The Federal Supreme Court also rejected the claimants' attempts to rely on alternative legal grounds (Articles 97 and 428 CO) to circumvent this rule.

In-House Structured Products and FINMA Guidance 03/2026

These two cases are of particular practical importance as they both involved "in-house" structured products issued by an affiliate of the bank. This directly resonates with the recently published FINMA Guidance 03/2026 (issued on 3 June 2026 and recently analyzed in our June Newsflash, FINMA Flags Product Risks in Portfolio Management), which notably addresses regulatory risks associated with in-house products, specifically within discretionary portfolio management.

In this respect, the Federal Supreme Court clarifies that under civil law, offering these types of affiliate-issued products in a pure execution-only setting does not, in itself, establish a concrete conflict of interests which triggers a duty of restitution, in particular where the client is a sophisticated investor able to compare the terms and conditions offered by several banks and select the most favorable offer.