COB 11.6 Delegation to a permitted third party.
A trustee firm may not appoint a permitted third party ("PTP") under this rule unless:
- (1)
the trustee firm could not reasonably be expected to discharge the responsibility itself.
- (2)
the delegation is made in writing which:
- (a)
describes in adequate detail the regulated activities to be carried on by the PTP; and
- (b)
states that the arrangement is to be regarded as a PTP arrangement for the purposes of this rule;
- (a)
- (3)
the PTP undertakes in writing to the trustee firm to comply with all rules relevant to the regulated activity in question; and
- (4)
the PTP is an appropriate person to perform the regulated activity.
For the purposes of COB 11.6.1 R (1) a trustee firm may reasonably be expected to accept responsibility for the PTP's compliance where the trustee firm undertakes substantial trustee business. The PTP rules are intended to be of assistance to smaller trustee firms who are inexperienced in regulated business.
For the purposes of COB 11.6.1 R (4), where the PTP has appropriate permission enabling him to carry on the regulated activity in question, that fact may be taken to indicate that the PTP is an appropriate person to perform the regulated activity.
When a trustee firm has appointed a PTP under COB 11.6.1 R, the trustee firm will not be responsible for compliance by the PTP with any rules relating to any regulated activity which the PTP carries on for the trustee firm.
The effect of COB 11.6.4 R is that the trustee firm is not liable for the acts or defaults of the PTP in respect of the regulated activities concerned.
The trustee firm must notify the FSA within 14 days of it delegating any regulated activity to a PTP and the notification must include the identity of the PTP.
Trustee firms are reminded that permitted third party is defined as being either: (a) an authorised person; (b) an exempt person for whom an authorised person is accepting responsibility; or (c) a person lawfully carrying on a regulated activity in another EEA State.
Trustee firms may delegate to persons other than permitted third parties under general principles of law and subject to the FSA's rules.
The rules permitting use of a PTP do not absolve the trustee firm from the need to comply with any restrictions on delegation or the manner of delegation derived from trust law or from the trust instrument. The rules do not affect the trustee firm's position under the general law, including the law of agency.