Tied Agents and Financial Services Assistants Query
Investment firms and investment service providers are allowed to use tied agents and/or financial services assistants for the provision of investment services.
The tied agent may be a natural or legal person to whom the principle of exclusivity applies. This means that the tied agent may act exclusively for only one single investment firm or one single credit institution. He may be appointed for the purposes of promoting the services of the investment firm, soliciting business or receiving orders from clients and transmitting them, and for providing investment advice with regard to financial instruments and services offered by the legal entity.
An investment firm that appoints a tied agent is liable pursuant to Article 1313a of the Allgemeines Bürgerliches Gesetzbuch (ABGB; General Civil Code) for each and every act or failure to act of the agent, provided he is acting in the name of the legal entity. Therefore, the investment firm is obliged to monitor the agent’s activities. If the tied agent resides in Austria, he must hold a trade licence pursuant to Article 136a of the Gewerbeordnung (GewO; Trade Act – commercial investment advice) and he must be entered in a public register to be kept by the FMA.
Compared with tied agents, financial services assistants are restricted with regard to their scope of activities. Only a natural person may be used as a financial services assistant. The financial services assistant may work only on the domestic market. In terms of the services provided, the financial services assistant may provide investment advice and take receipt of and transmit client orders relating to the financial instruments (transferable securities and investment fund units) listed under Article 1 no. 6 lit. a and c WAG 2007 in the name and for the account of one or several investment firms, investment service providers, Austrian credit institutions or – under certain circumstances – also for an Austrian insurance company in Austria. Financial services assistants are subject to the terms of the GewO and require a trade licence for the free trade of financial services assistant.
Financial services assistants provide their services as vicarious agents for the respective legal entity; their actions are attributed to the respective legal entity. The legal entity concerned therefore bears vicarious liability, pursuant to Article 1313a ABGB, for any negligence on the part of persons that it uses to provide investment services. Like tied agents, financial services assistants must also be entered in the public register kept by the FMA. Appointing financial services assistants for the provision of investment services presupposes that this has been approved in the administrative decision granting the licence to the investment firm or the investment service provider.