Liability umbrella
The term liability umbrella describes the banking supervisory exception regulated in section 2 (10) sentence 1 KWG . According to this, "a company that does not conduct any banking business within the meaning of Section 1 Paragraph 1 Clause 2 and only provides investment or contract brokerage, placement business or investment advice exclusively for the account and under the liability of a deposit-taking credit institution or a securities trading company as financial services Has its registered office in Germany or is active in Germany according to Section 53b (1) sentence 1 or (7), (tied agent) "does not provide a license from the Federal Financial Supervisory Authority (BaFin) if" the depositary credit institution or securities trading company as the liable company does so the Federal Agency indicates ". In this case, the activity of the contractually bound agent is assigned to the liable company (under civil law). As a result, claims cannot be based directly on Section 2 (10) KWG.
BaFin maintains a public register on the Internet via the contractually bound brokers notified to it, which shows the liable company, the contractually bound brokers, the date of the start and the end of the activity. Only liable companies have write access to the register. Details can be found in the ordinance on contractually bound brokers and the public register in accordance with Section 2 (10) sentence 6 of the Banking Act.
The liability umbrella experienced a certain renaissance in the course of the EU-wide implementation of the Financial Market Directive in 2007, as the Financial Market Directive upgraded investment advice, which was previously possible without a permit, to a financial service requiring a permit. In particular, so-called freelance investment advisors shied away (and still shied away) from the high financial and administrative expense of their own KWG license and made use of the exception rule.
A liability umbrella represents a legal entity for investment advisors who do not have their own license. The investment advisor acts as a tied agent in the name and for the account of the legal entity. The liability umbrella is obliged to supervise and control the advisor. The liability umbrella receives the commission for this and passes part of it on to the consultant. The consultant acts like an employee towards the customer, even if he is working on a self-employed basis.
If the legal entity has its main license in Austria in accordance with Section 3 (2) 1 and 3 WAG 2007, consultants in Germany can still be connected. To do this, this company must obtain permission from BaFin in Germany in accordance with Section 53 KWG. In Austria, the financial market was regulated as early as 1999 and no special regulation as in Germany with the 34f, previously 34c, was permitted. For this reason, several other large German financial distributors in Austria opened a liability umbrella and later applied for approval for Germany.