17 Structure of arrangements - Agent as client Structure of arrangements Under the ‘agent as client’ rule (COBS 2.4.3R), the regulatory system allows a DIM to treat the adviser firm as its client, rather than the underlying investor, so long as the DIM is aware that the adviser is acting as agent. The agent as client arrangement is often used in platform-intermediated solutions where the DIM has no knowledge of the underlying client, such as when the DIM makes their solutions available on third party platforms. Typically, in the agent as client scenario, the DIM will classify the adviser firm as a professional client although some DIMs may give adviser firms the option to be classified as a retail client. Where the DIM gives the adviser firm the option to be classified as a retail client, it is important the adviser firm checks that the DIM has FCA permission to manage investments for retail clients and not just professional clients. This can be done by checking the DIM’s permissions on the FCA register. In the agent as client scenario, there is no direct contractual relationship between the DIM and the underlying investor. However, the investor will, through their agreement with the adviser covering the use of a discretionary investment solution, need to give permission for the DIM’s fee to be deducted from the portfolio. There is an agreement in place between the DIM and the adviser firm as the DIM’s client (the Intermediary Agreement). There is then a separate agreement between the adviser firm and the underlying investor (the Adviser’s Client Agreement) in which the investor gives their express authority and consent to the adviser to act as the investor’s agent. Chapter two - Structure of arrangements - Agent as client Agreement in place between DIM and adviser firm Adviser Discretionary Investment Manager Agreement in place between adviser firm and underlying investor Investor
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