A MODEL FOR SUPERVISING INVESTMENT FIRM AGENTS: REGULATORY REQUIREMENTS, RISKS, AND BEST PRACTICES

Abstract

This article addresses the issue of an investment firm’s supervision of its agents in light of the position of the Polish Financial Supervision Authority. The starting point is the assumption that the use of the agency model is a significant element in the organization of investment services distribution, yet it simultaneously generates numerous legal, organizational, and operational risks. Of particular importance here is the obligation arising from Article 79(6a) of the Act on Trading in Financial Instruments, pursuant to which an investment firm is required to supervise the activities performed by an agent to ensure their compliance with the law and to eliminate the negative impact of the agent’s other activities on agency activities.
The study indicates that the investment firm’s liability for the agent’s acts and omissions is full and unconditional, which justifies the need for active, systematic, and multi-level supervision. The analysis concludes that the agent, despite its formal separateness, functionally constitutes part of the investment firm’s external organizational structure in the performance of agency activities. For this reason, supervision cannot be limited solely to the provisions of the agency agreement but should also cover internal procedures, the control system, reporting rules, the organization of activities, and the technical and organizational conditions of the agent’s operations.
Particular attention was devoted to high-risk areas, such as the prohibition on sub-agency, the method of engaging persons to perform activities on behalf of the agent, the flow of information, the control of communication with clients, and the use of internal control instruments. The article emphasizes that the effectiveness of supervision depends on the implementation of actual verification and response tools, rather than merely the formal assignment of responsibility to the agent. The UKNF’s position was assessed as a significant reference point for building an effective compliance model to protect clients, mitigate regulatory risk, and ensure that agency activities comply with capital market law requirements.