COBS 2.4 Agent as client and reliance on others
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.
Agent as client
- (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)
Paragraph (1) does not apply if:
- (a)
F has agreed with C1 in writing to treat C2 as its client; or
- (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.
- (a)
- (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:
- (a)
separate risk warnings required under this sourcebook;
- (b)
separate confirmations under the requirements on occasional reporting (COBS 16.3); and
- (c)
separate periodic statements.
- (a)
Reliance on other investment firms: MiFID and equivalent business
- (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:
- (a)
a MiFID investment firm or a third country investment firm; or
- (b)
an investment firm that is:
- (a)
- (2)
F1 may rely upon:
- (3)
F2 will remain responsible for:
- (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]
- (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)
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
- (1)
This rule applies if the rule on reliance on other investment firms (COBS 2.4.4 R) does not apply.
- (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.
- (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)
Compliance with (1) may be relied upon as tending to establish compliance with COBS 2.4.6 R.
- (3)
Contravention of (1) may be relied upon as tending to establish contravention of COBS 2.4.6 R.
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.