This blog gives you the latest topical news plus some informal comments on them from ShareSoc’s directors and other contributors. These are the personal comments of the authors and not necessarily the considered views of ShareSoc. The writers may hold shares in the companies mentioned. You can add your own comments on the blog posts, but note that ShareSoc reserves the right to remove or edit comments where they are inappropriate or defamatory.

Duty of Care or Fiduciary Duty to Investors?

The Financial Conduct Authority (FCA) have published two papers on their approach to consumers (i.e. retail savers/investors in their terminology). These cover whether a new “Duty of Care”, or a “Fiduciary Duty” (not the same thing) should be introduced.

Many people view financial market operators as paying more attention to their own interests than their clients, or that they do not take reasonable care to treat their clients fairly.

However there has been concern expressed that new obligations might lead to even more regulation than we have at present, which adds to the cost of investment substantially as more complex rules are introduced and more compliance officers hired to monitor the rules. For example, stockbroking charges have been rising recently due to more onerous regulation, some of it emanating from the EU.

This is not a one-sided debate in this writer’s view but a Fiduciary Duty would be simple to define as it is an established legal concept. A Duty of Care rather releases the clients of any obligation to take care of their own best interests.

The papers concerned are present below and the FCA would no doubt welcome your own comments on the subject.

Approach to Consumers paper: https://www.fca.org.uk/publications/corporate-documents/approach-consumers

Discussion Paper on a duty of care and potential alternative approaches: https://www.fca.org.uk/publications/discussion-papers/dp18-5-duty-care-and-potential-alternative-approaches

Roger Lawson (Twitter: https://twitter.com/RogerWLawson )

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