Study On The Fiduciary Duty Of Financial Institutions

Nowadays,both the world financial market and the domestic financial market are experiencing unprecedented changes.With the continuous accumulation of consumer wealth and the continuous change of financial needs,financial institutions and financial products are also undergoing rapid changes.First of all,the specialization of transaction technology and the complexity of financial needs have created a variety of financial products in the current financial market,but also deepened the gap between financial consumers and financial institutions in information and expertise.In essence,the demand of the funder and the financier will not be consistent,and financial institutions,as the market subject of self-interest,also have great conflicts of interest when they provide altruistic services for financial consumers.Under the two conditions,financial consumers have been in a very unfavorable situation in the financial market.In the above context,through case study and comparative law research,this paper takes the relationship of faith as the starting point,introduces the correspondence between the relationship of faith and the current legal relationship of financial consumption,and discusses why the fiduciary obligation is the best institutional arrangement to deal with the financial consumption contradiction in the current financial market environment.In the end,this paper considers the enlightenment to our legislation by referring to the changes of the faith system in American legislation,and tries to put forward some suggestions to improve ourcountry's faith obligation norms.First of all,the premise of binding financial institutions with fiduciary obligations is the increasingly unbalanced interest state between financial institutions and financial consumers in the legal relationship of financial consumption.On the one hand,in the legal relationship of financial consumption,consumers have a high degree of reasonable trust in financial institutions,and based on this trust,they authorize financial institutions to place their property or property rights under the disposal of financial institutions.A high degree of trust also requires financial institutions to achieve a corresponding high degree of honesty and credit,so that the interests of both sides can reach an ideal state.On the other hand,in reality,as the institutional design of financial products becomes more and more complex,the advantages of information and expertise in financial institutions are increasing.On the contrary,as an ordinary investor,the information and professional knowledge of financial consumers have been increasing for financial institutions,which makes them in a relatively unfavorable state.This has laid a huge hidden danger for financial institutions to infringe on the rights and interests of consumers.Through case retrieval and research,this paper finds that in recent years,the number of cases of financial institutions infringing on the legitimate rights and interests of consumers has multiplied.However,the general view of the court is that consumers,as the opposite party in the equal transaction,reach a transaction with financial institutions,which is the embodiment of the party's autonomy.They should be responsible for the risk-taking consequences brought by the decision-making,but ignore the fact that the hidden power of the imbalance in the context of a large number of financial consumption disputes has caused the financial consumers' rights and interests are being infringed.In the traditional sense,the trial thinking that the financial consumption relationship is regarded as the principal-agent relationship can not meet the needs of the protection of financial consumption rights and interests.Compared with the principal-agent relationship,the fiduciary relationship can well reflect the essential characteristics of the financial consumption relationship.According to the theory of fiduciary relationship,if there are the followingphenomena in a social relationship,it can be regarded as fiduciary relationship: firstly,the trustee should deal with its affairs in the interests of the principal.[Tamar Frankel,"fiduciary law",71 California law review(1983),pp.808-809.] secondly,the client has a high degree of reasonable trust and dependence on the trustee.Thirdly,the trustor needs to authorize the trustee and put the relevant property or rights under the disposal of the trustee.The authorization obtained by the trustee must be extensive.Finally,the client will be in a weak position because of this authorization,and may face the crisis of abuse of power by the trustee at any time.This paper introduces the expansion of fiduciary relationship and fiduciary obligation in the financial field of the United States based on the development and evolution of investment consultants and securities firms in the legislative and judicial practice of the United States.The relationship between the trustor and the trustee in the fiduciary relationship is essentially the same as the unbalanced interest relationship between the subjects of financial consumption relationship in China.Therefore,the legislation of our country can recognize the relationship of financial consumption as the relationship of faith,and restrict the obligation of faith to the financial institutions to ease the conflict between the parties.As to why the fiduciary duty system has a strong superiority in today's financial market environment,"principal-agent" theory holds that if one party grants a certain decision-making power to the other,the party who is granted the decision-making power is the trustee,and the other party who determines,hires and grants the decision-making power is the trustor.In this case of principal-agent,the self-interest trustee can not always deal with affairs for the interests of the principal.When the interests of both parties are inconsistent,the trustee often makes adverse decisions to the principal due to its intention to pursue the maximization of its own interests and infringes the legitimate rights and interests of the principal.The theory of "principal-agent" has something in common with the unfair position and unbalanced interest relationship between the parties in the relationship of faith.Historically,the parties have tried to solve the problems caused by incomplete contract terms by restricting the decision-making power of the client.However,this approach greatlyreduces the efficiency of decision-making of the trustee.Different from the above solutions,the principle of fiduciary duty,as a rule that can be interpreted and applied,can fill in the gap of the contract when the contract terms are incomplete,so as to fill in the gap of the contract terms and better protect the interests of the client.Therefore,abandon the traditional solution.