Three Models of the Bank's Fiduciary Duty
2(5) Law and Financial Markets Review 422
17 Pages Posted: 23 Apr 2014
Date Written: September 2008
Legal systems impose varying degrees of fiduciary duty on the banks. This paper analyses three models, thereby pointing out the differences between them. First, the Anglo-American model, which does not inherently consider the bank-customer relationship as a fiduciary one, yet it states exceptions to the rule. Second, the continental European model, that defines specific cases in which a fiduciary relationship exists. Third, the Israeli model, which applies the fiduciary duty to the bank-customer relationship as a whole and therefore states the widest standard of conduct for the banks. This paper concludes that a certain harmonization of the principle would be beneficial to the financial markets.
Keywords: bank-customer relationship, fiduciary duty, good faith, Israeli law, investment advice, duty of disclosure, conflicts of interest
JEL Classification: K19, K23, K39, N20
Suggested Citation: Suggested Citation