Switzerland must respond to rapid changes in the financial sector by creating a centralised watchdog body, according to an expert report commissioned by the finance ministry.
It said a new central authority was needed to oversee the activities of all providers of financial services, and not only banks. It recommends cutting back the scope for self-regulation and increasing external auditing.
The recommendations are likely to meet stiff resistance in the industry, and possibly in the federal administration.
In their report published on Thursday, the experts proposed creating the body by the merger of the Federal Banking Commission and the Federal Office for Private Insurance.
Because of a crisis at the Money Laundering Control Authority, the experts are also calling for the new body to be given powers to monitor compliance with 'due diligence' rules laid down in the law on money laundering.
Presenting the report in Bern, the chairman of the group of experts, Professor Jean-Baptiste Zufferey, said the regulatory and monitoring authorities should place more emphasis in future on issues such as ethics and integrity.
He also urged the Swiss financial sector and authorities to take a more active role in discussions taking place at an international level.
The finance ministry is expected to distribute the report to all concerned parties to gather their feedback on its 42 recommendations, before proceeding with any changes.
It is likely to meet with resistance in the financial sector, not least because it calls for the activities self-regulatory bodies to be limited to assisting the authorities in drawing up detailed due diligence standards.
The measures would also result in much greater expenditure on external auditing by financial services companies.
There could also be opposition from the government bodies affected by the merger proposals.
In an effort to forestall some of the opposition, the experts are proposing moving forward in stages. The first stage would require simply setting up the new body, which could be done without changing existing laws. The legislation would be adapted in a second stage.
swissinfo with agencies