Fiduciary duty not the best approach
Newly appointed head of the UK equivalent of the Australian Securities and Investments Commission, Martin Wheatley, has hinted that fiduciary duty might not be the optimal approach to investor protection in the upcoming reforms.
Speaking at the Australian Centre for Financial Studies lecture, Wheatley said enhancing investor protection was pivotal to the reform process, but that a better approach was needed since ethical behaviour could not be legislated.
“[Rebuilding] investor confidence … will require greater use of judgement and a forward looking perspective, and pre-emptive actions to stem any potential build-up of risk before significant damage is done,” he said.
“Financial markets are about managing and pricing risk, not eliminating it,” Wheatley added.
Wheatley, who will soon become the head of the UK Financial Conduct Authority, had come out in support of greater regulatory intervention in retail and wholesale financial products, noting regulators and governments are now taking a more “considered” approach to reforms.
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