24 Structure of arrangements - Reliance on others Structure of arrangements The regulatory system allows a DIM to operate under a formal agreement with the Intermediary and the investor using the ‘Reliance on others’ rule (COBS 2.4.4R). ‘Reliance on others’ is so called because, in providing a service to the underlying client, the DIM can rely on any information about the client provided by the adviser. The DIM can also rely on the suitability of any recommendations in respect of the service that have been provided to the client by the adviser. The aim is proportionate regulation – it avoids one firm having to comply with the same requirements in respect of one client. The tripartite relationship between the adviser, the DIM and the investor generally results in three agreements: 1. Between the DIM and the adviser (Intermediary agreement) 2. Between the adviser and the investor (Adviser client agreement), and 3. Between the DIM and the investor (Discretionary management agreement) Chapter three - Structure of arrangements - Reliance on others DIM Investor Adviser Under this scenario, both the DIM and the adviser have contractual responsibilities towards the underlying investor and both will have an obligation to deliver ‘good outcomes’ to such investors under the Consumer Duty. Depending on the contractual documentation, regulatory obligations to the investor are shared between the adviser firm and the DIM. The investor will normally be classified as a retail client. The adviser firm is responsible for: • The completeness and accuracy of any information about the investor it transmits to the DIM. • The suitability of any advice or recommendations provided to the investor. This would include the recommendation of a DIM and/or of a specific discretionary management service as well as the process of setting the parameters of any investment mandate under which the DIM is required to operate.
RkJQdWJsaXNoZXIy NjM2Njg1