Is there Scope for Reforming the Emaciated Concept of Fiduciary Law in Finance? Critically Discussing the Potential Achievements of Reform

Abstract

This article is dedicated to Professor Mads Andenas on the occasion of his 60th birthday in 2017. Professor Andenas was my PhD supervisor, co-author and mentor, and this topic was very much inspired by discussions we had in the course of writing The Foundations and Future of Financial Regulation (Routledge 2014). I never cease to be amazed at the breadth of insight Professor Andenas has in many diverse areas of law. He is a scholar of many talents and remains a beacon of inspiration to me. This article argues that the limited application of fiduciary law in finance, which has been both a persistent doctrinal trend, as well as a position supported by the financial services industry for its friendlier commercial effects, has played no small part in bringing about the modern financial sector and its negative externalities However it is no panacea to embrace general fiduciary law in finance to address all of the contemporary problems, as such an embrace may be over-inclusive and disruptive to wholesale sector transactions. However we consider it timely to introduce a regulatory principle of a ‘thick’ fiduciary law to provide extended and more intensive consumer protection in certain areas of lacunae identified in the article. We do not regard the introduction of a ‘thick fiduciary’ principle as being able to supplant regulatory law in consumer protection. However we think it provides a complement for the existing regulatory framework and its reforms in progress.