Finance law: the relationship between private law and regulation

Borg Cardona, Yvette Anna (2023). Finance law: the relationship between private law and regulation. University of Birmingham. Ph.D.

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Abstract

This thesis argues that bank customers need legal protection to be impurely paternalistic given their behavioural biases, weaker position and vulnerability, banking services’ necessity, financial exclusion risk and banks’ misconduct. The thesis argues that the current legal and regulatory framework fails to adequately provide such protection and provides reasons therefor. The thesis contends that a synthesis of private law and
financial regulation is required to form a coherent system of finance law which would furnish adequate protection. The thesis claims that this is possible through primary legislation which would impose a statutory general fiduciary duty on banks to customers. The thesis asserts that such a duty should include the duty to advise. The duty to advise would require banks to consider the customer’s existing personal circumstances and, accordingly, provide tailored advice to maintain or improve their welfare.

The thesis further argues that the statutory fiduciary duty would provide adequate protection because it would furnish the kind of impure paternalism required. It would also provide proper both ex ante protection, at the moment the contract is concluded, and ex post protection, throughout the contract’s life span. The thesis affirms that such a duty would therefore protect the welfare of customers throughout the whole duration of their relationship with banks, which relationship may experience life-changing situations. Finally, the thesis recommends a realistic and plausible method of implementing the statutory fiduciary duty, namely, by public funding of costs of litigation against banks by the Financial Conduct Authority. The statute establishing the fiduciary duty would empower the Financial Conduct Authority to finance litigation costs both to customers who intend to institute proceedings individually and to those who intend to represent others in class actions. The thesis also claims that a narrow degree of wealth redistribution is required to avoid financial exclusion of customers by compelling banks to provide their basic services to all customers, given the public utility nature of such services, and to prevent customers from paying the costs of banks’ regulation, supervision and litigation against banks by imposing such costs on banks themselves.

Type of Work:

Thesis (Doctorates > Ph.D.)

Award Type:

Doctorates > Ph.D.

Supervisor(s):