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, equivalent third country or optional exemption business3, other ancillary services.

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 16.2 or COBS 16A.33); and

   3. (c)

      separate periodic statements.

1. (1)

   This rule applies if a firm (F1), in the course of performing MiFID or equivalent third country business, receives an instruction to provide3 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 suitability3 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.

4Where a firm carrying on insurance distribution activities in relation to an insurance-based investment product is required to perform an appropriateness assessment under COBS 10A, it may rely upon:

1. (1)

   a suitability assessment performed by another firm, if that other firm was subject to the requirements for assessing suitability in COBS 9A or equivalent requirements in another EEA State; or

2. (2)

   an appropriateness assessment performed by another firm, if that other firm was subject to the requirements for assessing appropriateness in COBS 10A.2 or equivalent requirements in another EEA State,

in performing that assessment.

[Note: article 30(2) of the IDD]

1. (1)

   This rule applies if the applicable4 rule on reliance on other investment firms or insurance distributors (COBS 2.4.4 R and COBS 2.4.5AR4) 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.

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.

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.