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COBS 2.4 Agent as client and reliance on others

COBS 2.4.1RRP

This section applies to a firm that is conducting designated investment business or ancillary activities or, in the case of MiFID or equivalent third country business, other ancillary services.

COBS 2.4.2GRP

This section is not relevant to the question of who is the firm's counterparty for prudential purposes and it does not 2affect any obligation a firm may owe to any other person under the general law.

Agent as client

COBS 2.4.3RRP
  1. (1)

    If a firm (F) is aware that a person (C1) with or for whom it is providing services is acting as agent for another person (C2) in relation to those services, C1, and not C2, is the client of F in respect of that business.

  2. (2)

    Paragraph (1) does not apply if:

    1. (a)

      F has agreed with C1 in writing to treat C2 as its client; or

    2. (b)

      C1 is neither a firm nor an overseas financial services institution1 and the main purpose of the arrangements between the parties is the avoidance of duties that F would otherwise owe to C2.

    If this is the case, C2 is the client of F in respect of that business and C1 is not.

  3. (3)

    If there is an agreement under (2)(a) in relation to more than one C2 represented by C1, F may discharge any requirement to notify, obtain consent from, or enter into an agreement with each C2 by sending to, or receiving from, C1 a single communication expressed to cover each C2, except that the following will be required for each C2:

    1. (a)

      separate risk warnings required under this sourcebook;

    2. (b)

      separate confirmations under the requirements on occasional reporting (COBS 16.3); and

    3. (c)

      separate periodic statements.

Reliance on other investment firms: MiFID and equivalent business

COBS 2.4.4RRP
  1. (1)

    This rule applies if a firm (F1), in the course of performing MiFID or equivalent third country business, receives an instruction to perform an investment or ancillary service on behalf of a client (C) through another firm (F2), if F2 is:

    1. (a)

      a MiFID investment firm or a third country investment firm; or

    2. (b)

      an investment firm that is:

      1. (i)

        a firm or authorised in another EEA State; and

      2. (ii)

        subject to equivalent relevant requirements.

  2. (2)

    F1 may rely upon:

    1. (a)

      any information about C transmitted to it by F2; and

    2. (b)

      any recommendations in respect of the service or transaction that have been provided to C by F2.

  3. (3)

    F2 will remain responsible for:

    1. (a)

      the completeness and accuracy of any information about C transmitted by it to F1; and

    2. (b)

      the appropriateness for C of any advice or recommendations provided to C.

  4. (4)

    F1 will remain responsible for concluding the services or transaction based on any such information or recommendations in accordance with the applicable requirements under the regulatory system.

[Note: article 20 of MiFID]

COBS 2.4.5GRP
  1. (1)

    If F1 is required to perform a suitability assessment or an appropriateness assessment under COBS 9 or COBS 10, it may rely upon a suitability assessment performed by F2, if F2 was subject to the requirements for assessing suitability in COBS 9 (excluding the basic advice rules) or equivalent requirements in another EEA State in performing that assessment.

  2. (2)

    If F1 is required to perform an appropriateness assessment under COBS 10, it may rely upon an appropriateness assessment performed by F2, if F2 was subject to the requirements for assessing appropriateness in COBS 10.2 or equivalent requirements in another EEA State in performing that assessment.

Reliance on others: other situations

COBS 2.4.6RRP
  1. (1)

    This rule applies if the rule on reliance on other investment firms (COBS 2.4.4 R) does not apply.

  2. (2)

    A firm will be taken to be in compliance with any rule in this sourcebook that requires it to obtain information to the extent it can show it was reasonable for it to rely on information provided to it in writing by another person.

COBS 2.4.7ERP
  1. (1)

    In relying on COBS 2.4.6 R, a firm should take reasonable steps to establish that the other person providing written information is not connected with the firm and is competent to provide the information.

  2. (2)

    Compliance with (1) may be relied upon as tending to establish compliance with COBS 2.4.6 R.

  3. (3)

    Contravention of (1) may be relied upon as tending to establish contravention of COBS 2.4.6 R.

COBS 2.4.8GRP

It will generally be reasonable (in accordance with COBS 2.4.6R (2)) for a firm to rely on information provided to it in writing by an unconnected authorised person or a professional firm, unless it is aware or ought reasonably to be aware of any fact that would give reasonable grounds to question the accuracy of that information.

COBS 2.4.9RRP

Any information that a rule in COBS or CASS requires to be sent to a client may be sent to another person on the instruction of the client so long as the recipient is not connected to the firm.

COBS 2.4.10RRP

In the case of business that is not MiFID or equivalent third country business, if a rule in COBS or CASS requires information to be sent to a client, a firm need not send that information so long as it takes reasonable steps to establish that it has been or will be supplied by another person.