• COBS 20.1 COBS 20.1 Application

    • COBS 20.1.1

      Chapter 20 of these Rules applies to Third Party Providers.

    • Guidance

      1. Third Party Providers intermediate the relationship between their Customers and their Customers’ Financial Institutions. The relationship between Third Party Providers and their Customers is separate from and does not affect Customers’ existing relationships with their Financial Institutions.
      2. Third Party Providers differ from technical service providers because they have a relationship with Customers of Financial Institutions for the provision of Third Party Services. While technical service providers may provide software, infrastructure or other products and services that involve the accessing and processing of Specified Information, they do not have such a relationship with Customers of Financial Institutions.

      For example, a telecommunications company provides infrastructure and software that allows its customers to transfer information to other parties. Some of the telecommunications company’s customers are Customers of Financial Intitutions and these Customers use the telecommunications company’s services to transfer Specified Information to their Financial Institutions. The telecommunications company is not a Third Party Provider because it has not established a relationship between the Customers and the Customers’ Financial Institutions for the provision of Third Party Services.
      3. In some circumstances, a Third Party Provider may offer technical services (the Offering Third Party Provider) to another Third Party Provider (the Receiving Third Party Provider). Such technical services may include software or infrastructure that allows the Receiving Third Party Provider to connect to specific Financial Institutions on behalf of its Customers. Under these circumstances:
      (a) The Receiving Third Party Provider is a Third Party Provider to its Customers.
      (b) If the Offering Third Party Provider has a contractual relationship with the Receiving Third Party Provider’s Customers, then:
      (i) The Offering Third Party Provider is also a Third Party Provider to those Customers.
      (ii) The Offering Third Party Provider is the Primary Financial Institution for the Receiving Third Party Provider.
      (c) If the Offering Third Party Provider does not have a contractual relationship with the Receiving Third Party Provider’s Customers, then:
      (i) The Offering Third Party Provider is not a Third Party Provider when dealing with those Customers.
      (ii) The Offering Third Party Provider is a technical services provider for the Receiving Third Party Provider.
      (iii) The Customer’s Financial Institution is the Primary Financial Institution for the Receiving Third Party Provider.