1 Directive 2014/65/EU of the European Parliament and of the Council of 15 May 2014 on markets in financial instruments and amending Directive 2002/92/EC and Directive 2011/61/EU (recast),  OJ L173/349 (MiFID II).
2 See the analysis in Hugh Beale (ed), Chitty on Contracts—General Principles (32nd edn, Sweet & Maxwell 2017) paras 7-006, 7-008, 7-032 (the statements must not have been mere ‘puff’ or sales-oriented commendatory remarks because reliance based on those would not be reasonable) and in Jack Beatson, Anson’s Law of Contract (30th edn, OUP 2016) 319–320.
3 Caparo Industries plc v Dickman  2 AC 605 (holding that reliance, or the fact that the statement is material to the effect that it induced the contract, must be shown by the relying party and must be reasonable) and South Australia Asset Management Corporation Respondents v York Montague Ltd  AC 191 (holding that reliance may be inferred from the factual context). See the analysis in Chitty on Contracts (n 2) paras 7-006, 7-032, 7-034, and in Anson’s Law of Contract (n 2). There is a presumption that a material misrepresentation will have induced the representee’s entry into the contract, see in Alistair Hudson, The Law of Finance (2nd edn, Sweet & Maxwell 2013) 18–49 in, citing Smith v Chadwick (1884) 9 App Cas 187.
4 Section 2(1) Misrepresentation Act 1967. Of course, a misrepresentation could have been made fraudulently, that is, knowingly, or without belief in its truth, or recklessly, careless whether it was true or false; see Derry v Peek (1889) 14 App Cas 337, and Chitty on Contracts (n 2) para 7-049ff.
5 Chitty on Contracts (n 2) para 7-010 to 7-014.
6  QB 801. (A petroleum company negotiated a lease with a prospective tenant. It was held to be liable for negligently giving overly optimistic estimates of potential revenues from petrol sales. The forecast was based on a detailed evaluation by an expert employee of the company and would probably have been correct but for changed circumstances, of which the company was aware. It was clear that the tenant was not able to make the assessment on an equal footing and was relying on the company’s expert forecast.) See for a discussion of the decision Anson’s Law of Contract (n 2) 145ff.
7 Depending on the circumstances, the opinion could also give rise to an action in tort based on the principle of assumption of responsibility of Hedley Byrne & Co Ltd v Heller and Partners Ltd  AC 465, discussed in paras 4.11ff below.
8 This argument is put forward in Chitty on Contracts (n 2) para 7-007.
9 Article 24(3) of MiFID II.
15 A position that was very much confirmed in JP Morgan Chase Bank v Springwell Navigation Corporation  EWHC 1186 (Comm) in which the plaintiff argued that the bank, acting through several sales representatives over several years during which the plaintiff was a client of the bank and its predecessors, owed advisory duties or responsibilities in respect of investment decisions. Although it was accepted that the relationship between plaintiff and defendant extended beyond ‘execution only’, and that regular discussions about the merits of certain investments took place, Gloster J did not accept that the bank’s duty of care extended beyond ensuring that the description of the investments was accurate, based on the notion that the plaintiff was a ‘sophisticated investor with commercial acumen and with significant experience in capital market investments’. In addition, it was relevant that the plaintiff acknowledged that it had placed no reliance on any information from the bank in connection with decisions to invest, while the bank had expressly disclaimed liability for its recommendations.
16 Gerard McMeel, McMeel on the Construction of Contracts (3rd edn, OUP 2017) paras 26.03, 26.42–24.76, discussing Watford Electronics Ltd v Sanderson CFL Ltd  EWCA Civ 317; Peekay Intermark Ltd v Australia & New Zealand Banking Group Ltd  EWCA Civ 386; and Springwell Navigation Corp v JP Morgan Chase Bank  EWCA Civ 1212. See further Hudson (n 3) paras 17-29 to 17-37, discussing particularly Peekay.
17 This rule was inspired by the similar rule in the Financial Conduct Authority’s (FCA’s) Handbook, the Conduct of Business Sourcebook (COBS), be it that the original FCA rule required less strictly that a firm ‘take reasonable steps’ rather than ‘ensure’. The new and stricter rule in COBS 4.2.1R will be actionable in accordance with the policy decision to apply s 138D of the Financial Services and Markets Act 2000 (FSMA) (formerly s 150 of FSMA as substituted by the Financial Services Act 2012) to all rules in COBS, FCA PS 07/6, ‘Feedback on CP06/19’ paras 26.9 and 26.10, see Gerard McMeel and John Virgo (eds), McMeel and Virgo on Financial Advice and Financial Products (3rd edn, OUP 2014) paras 1.54–1.5512.41.
18 Chitty on Contracts (n 2) para 7-158.
19 Bell v Lever Bros Ltd  AC 161. See John Cooke and David Oughton, The Common Law of Obligations (3rd edn, Bloomsbury 2000) 186. Chitty on Contracts (n 2) para 7-018.
20 Goldsmith v Rodger  2 Lloyd’s Rep 249 and Oakes v Turquand (1867) LR 2 HL 325, as discussed by Hudson (n 3) 18–53.
21 See in particular the list of requirements contained in art 44 (Fair, clear and not misleading information requirements) of Commission Delegated Regulation (EU) 2017/565, which includes a requirement in sub-para 2(b) to ensure that information that an investment firm provides ‘is accurate and always gives a fair and prominent indication of any relevant risks when referencing any potential benefits of an investment service or financial instrument’. See also FCA’s rules in COBS, which expect that the fair, clear and not misleading rule must be interpreted in the context of the circumstances, in particular ‘the nature of the client and of its business’, see COBS 4.2.2G (1), and further that eg facts and figures around yield curves give a ‘balanced impression’ as well as that ‘complex charging structures’ are explained sufficiently, taking ‘the needs of the recipient into account’, see COBS 4.2.4G.
24 Lord Diplock in Mutual Life and Citizens’ Assurance Co Ltd v Clive Raleigh Evatt  AC 793, 801.
25 Hedley Byrne (n 7) 502–03.
26 Henderson (n 23) 178 (Lord Goff observed that the ‘concept indicates too that in some circumstances, for example where the undertaking to furnish the relevant service is given on an informal occasion, there may be no assumption of responsibility’).
27 See Lord Goff, Henderson (n 23) 181, noting ‘I wish to add in parenthesis that, as Oliver J recognised in Midland Bank Trust Co Ltd v Hett, Stubbs & Kemp  Ch 384, 416F–G (a case concerned with concurrent liability of solicitors in tort and contract, to which I will have to refer in a moment), an assumption of responsibility by, for example, a professional man may give rise to liability in respect of negligent omissions as much as negligent acts of commission, as for example when a solicitor assumes responsibility for business on behalf of his client and omits to take a certain step, such as the service of a document, which falls within the responsibility so assumed by him’.
28 See Lord Goff, Henderson (n 23) 194:
But, for present purposes more important, in the instant case liability can, and in my opinion should, be founded squarely on the principle established in Hedley Byrne itself, from which it follows that an assumption of responsibility coupled with the concomitant reliance may give rise to a tortious duty of care irrespective of whether there is a contractual relationship between the parties, and in consequence, unless his contract precludes him from doing so, the plaintiff, who has available to him concurrent remedies in contract and tort, may choose that remedy which appears to him to be the most advantageous.
29 See Lord Steyn in Williams v Natural Life Health Foods Ltd  1 WLR 830, 834. This is in line with Lord Devlin’s observation in Hedley Byrne (n 7) 526, that the ‘respondents in this case cannot deny that they were performing a service. Their sheet anchor is that they were performing it gratuitously and therefore no liability for its performance can arise. My Lords, in my opinion this is not the law. A promise given without consideration to perform a service cannot be enforced as a contract by the promisee; but if the service is in fact performed and done negligently, the promisee can recover in an action in tort.’ The principle may therefore be seen to operate also as a tool to find liability where, strictly, there is no consideration and therefore no immediately identifiable bargain. See further Cooke and Oughton (n 19) 203.
31 See also the speech of Lord Hoffman in Customs and Excise Commissioners v Barclays Bank plc  1 AC 181, 200, who observed in respect of the position of the managing agents in Henderson, ‘[t]o say that the managing agents assumed a responsibility to the Names to take care not to accept unreasonable risks is little different from saying that a manufacturer of ginger beer assumes a responsibility to consumers to take care to keep snails out of his bottles’.
32 See Chapter 1, para 1.15ff (discussing the professional nature of investment services).
34  1 AC 181, 198. When reviewing the authorities that applied the Hedley Byrne principle, his Lordship observed that there
is a tendency, which has been remarked upon by many judges, for phrases like ‘proximate’, ‘fair, just and reasonable’ and ‘assumption of responsibility’ to be used as slogans rather than practical guides to whether a duty should exist or not. These phrases are often illuminating but discrimination is needed to identify the factual situations in which they provide useful guidance. For example, in a case in which A provides information to C which he knows will be relied upon by D, it is useful to ask whether A assumed responsibility to D: Hedley Byrne & Co Ltd v Heller & Partners Ltd  AC 465: Smith v Eric S Bush  1 AC 831. Likewise, in a case in which A provides information on behalf of B to C for the purpose of being relied upon by C, it is useful to ask whether A assumed responsibility to C for the information or was only discharging his duty to B: Williams v Natural Life Health Foods Ltd  1 WLR 830. Or in a case in which A provided information to B for the purpose of enabling him to make one kind of decision, it may be useful to ask whether he assumed responsibility for its use for a different kind of decision: Caparo Industries plc v Dickman  2 AC 605.
37  EWCA Civ 1212 . Discussed by McMeel and Virgo (n 17) paras 7.130–7.132.
39 See Lord Hoffman, SAAMCO (n 38) 210. (The defendant valuers had undertaken to value properties on the security of which the plaintiff lenders were considering advancing money on mortgage. In each case, the defendants had considerably overvalued the property. Following the valuations, loans were made which would not have been if the plaintiffs had known the true values of the properties. The borrowers subsequently defaulted against a background of a depreciating property market, substantially increasing the plaintiff’s losses. The plaintiffs brought actions against the defendants for damages for negligence and breach of contract.)
41  1 Lloyd’s Rep 157.
42 Aneco Reinsurance (n 41) 190.
44 Both Lord Hoffman in SAAMCO and Lord Millett in Aneco Reinsurance (dissenting) found reasonable reliance based on the principle outlined in Hedley Byrne (n 7) and Henderson (n 23).
45  UKSC 21. See for a discussion George Walker and Robert Purves (eds), Financial Services Law (4th edn, OUP 2018) para 19.12.
46 See, particularly, Springwell (n 16). See also the conclusions on advice-related claims based on the tort of negligence in Walker and Purves (n 45) paras 15.68–15.98.
48 See Lord Goff in Henderson (n 23) 178 (observing ‘likewise that an assumption of responsibility may be negatived by an appropriate disclaimer’). See also McMeel and Virgo (n 17) paras 7.133–7.134 citing Springwell (n 16) and Peekay (n 16).
49 See Chapter 5, paras 5.36ff (discussing exclusion clauses).
50  EWHC 3034 (Ch).
51 Crestsign (n 50) .
52 See for criticism of the decision as contrary to public policy and more generally, in relation to the doctrine of ‘estoppel by contract’, Paul Marshall, ‘Humpty Dumpty is Broken: “Unsuitable” and “Inappropriate” Swaps Transactions’ (2014) December JIBFL 679. Similarly in relation to the weak basis for the doctrine of ‘estoppel by contract’, McMeel (n 16) paras 26.73–26.76.
53 See for an argument that ‘portfolio management’ is essentially an execution-oriented service and should be treated differently from investment advice, paras 4.32ff below.
54 See Recital (80) of Delegated Regulation (EU) 2017/565, observing that the appropriateness test concerns ‘the need to obtain information regarding the knowledge and experience of the client in order to assess the appropriateness of the service or the financial instrument for the client’. See further the European Securities and Markets Authority (ESMA), MiFID Practices for Firms Selling Complex Products (ESMA/2014/146) para 22 (observing in relation to appropriateness that ‘when assessing appropriateness, firms consider all elements and features that determine the complexity of the product and the risks involved and should assess the knowledge and experience of the client in that context’.) See also Luca Enriques and Matteo Gargantini, ‘The Overarching Duty to Act in the Best Interest of the Client in MiFID II’ in Danny Busch and Guido Ferrarini (eds), Regulation of EU Financial Markets—MiFID II and MiFIR (OUP 2017) para 4.12.
55 Article 55(3) of Delegated Regulation (EU) 2017/565. See also Recital (80) of MiFID II.
56 Article 56(1) of Delegated Regulation (EU) 2017/565.
58 See the definition of ‘investment advice’ provided in art 4(1)(4) of MiFID II in conjunction with art 9 of Delegated Regulation (EU) 2017/565, and art 53 of the Financial Services and Markets Act 2000 (Regulated Activities) Order 2001, SI 2001/544.
59 See the clarification of the term ‘personal recommendation’ in art 9 of Delegated Regulation (EU) 2017/565. Similarly, FCA’s guidance in the Perimeter Guidance manual (PERG) 5.8.10 that ‘advice’ requires an element of opinion, comment, or value judgement on the part of the adviser. See McMeel and Virgo (n 17) para 14.108. It follows that a recommendation is not a personal recommendation, and therefore not investment advice, for MiFID II or FSMA purposes if it is issued generally to the public or a sector of the public.
60 Article 25(2) of MiFID II in conjunction with arts 54 and 55 of Delegated Regulation (EU) 2017/565, as further elaborated by ESMA in its Final Report—Guidelines on Certain Aspects of the MiFID II Suitability Requirements (ESMA 35-43-869, 2018).
61 Article 54(7) of Delegated Regulation (EU) 2017/565, which lists several matters that the investment firm must take into account. See also ESMA, MiFID practices for firms selling complex products (n 54) para 20, observing that a firm must ensure that ‘before a firm decides to advise clients on complex products, it first applies a high level of due diligence to evaluate those products. This evaluation should assess the intelligibility of the risk-reward profile, the level of leverage, and all the various risk components of the product (including market risk, credit/counterparty risk and liquidity risk)’.
62 Article 55(3) of Delegated Regulation (EU) 2017/565, which applies equally to appropriateness and suitability requirements.
63 Article 54(3) of Delegated Regulation (EU) 2017/565.
64 cf generally on the concept of personal recommendations, the Committee of European Securities Regulators (CESR), CESR’s Technical Advice on Possible Implementing Measures of the Directive 2004/39/EC on Markets in Financial Instruments—1st Set of Mandates where the deadline was extended and 2nd Set of Mandates (CESR/05–290b) 7–11.
66 Springwell (n 16) para 210.
67  Lloyds Rep 412.
68 The definition of ‘investment advice’ has been retained under the FSMA and its subsidiary legislation: see art 53 of the Financial Services and Markets Act (Regulated Activities) Order 2001, SI 2001/544 (RAO).
69 Quoted, in agreement, by Henderson J, in Walker v Inter-Alliance Group plc  EWHC 1858 –.
70 See for an analysis of the characteristics of the investment management service, Chapter 7, paras 7.01ff.
71 See, on a similar lack of regulatory level playing field between (a) Undertakings for Collective Investments in Transferable Securities (UCITS) and UCITS management companies authorized under Directive 2009/65/EC of the European Parliament and of the Council of 13 July 2009 on the coordination of laws, regulations and administrative provisions relating to undertakings for collective investment in transferable securities (UCITS),  OJ L302/32 (UCITS Directive), and management companies authorized under the Directive 2011/61/EU of the European Parliament and of the Council of 8 June 2011 on Alternative Investment Fund Managers and amending Directives 2003/41/EC and 2009/65/EC and Regulations (EC) 1060/2009 and (EU) 1095/2010,  OJ L174/1 (AIFMD), and (b) MiFID II authorized investment managers in the context of MiFID II product regulation: Busch (n 11) paras 5.02–5.05 (noting that ESMA is right to suggest that the UCITS Directive and AIFMD ought to be amended so that the management companies are subject to the MiFID II product governance rules).
72 See the definitions in art 4(1) of Directive 2004/39/EC of the European Parliament and of the Council of 21 April 2004 on markets in financial instruments amending Council Directives 85/611/EEC and 93/6/EEC and Directive 2000/12/EC of the European Parliament and of the Council and repealing Council Directive 93/22/EEC,  OJ L145/1 (MiFID I) and art 4(1) of MiFID II. For a description of the definitions in MiFID II, see the Glossary, Chapter 1, para 1.65.
73 Article 45(1) of MiFID II Delegated Regulation (EU) 2017/565.
74 Article 45(2) of MiFID II Delegated Regulation (EU) 2017/565 and art 30(2), second para, of MiFID II (re trade specific opt down rights for eligible counterparties).
75 Article 30(1), first para, of MiFID II.
76 See paras 4.42ff below (discussing the MiFID II client’s best interest rule in general).
77 Article 30(1), second para, of MiFID II.
78 Recital (74) of MiFID II Delegated Regulation (EU) 2017/565 observes that MiFID II:
strengthens investment firms’ obligations to disclose information on all costs and charges and extends these obligations to relationships with professional clients and eligible counterparties. In order to ensure that all categories of clients benefit from such increased transparency on costs and charges, investment firms should be allowed, in certain situations, when providing investment services to professional clients or eligible counterparties, to agree with these clients to limit the detailed requirements set out in this Regulation. This however should never lead to disapplying the obligations imposed on investment firms pursuant to Article 24(4) of [MiFID II]. In this respect, investment firms should inform professional clients about all costs and charges as set out in this Regulation, when the services of investment advice or portfolio management are provided or when, irrespective of the investment service provided, the financial instruments concerned embed a derivative. Investment firms should also inform eligible counterparties about all costs and charges as set out in this Regulation when, irrespective of the investment service provided, the financial instrument concerned embeds a derivative and intends to be distributed to their clients. However, in other cases, when providing investment services to professional clients or eligible counterparties, investment firms may agree, for instance, at the request of the client concerned, not to provide the illustration showing the cumulative effect of costs on return or an indication of the currency involved and the applicable conversion rates and costs where any part of the total costs and charges is expressed in foreign currency.
79 Recital (93) of MiFID II Delegated Regulation (EU) 2017/565 observes that
80 Recital (63) of MiFID II Delegated Regulation (EU) 2017/565 observes in relation to the information requirements set out in art 24 of MiFID II that
Articles 48(1) and 50(1) of MiFID II Delegated Regulation (EU) 2017/565 permit tailoring of information.
81 Article 54(3) of MiFID II Delegated Regulation (EU) 2017/565 permits the portfolio manager or investment adviser, for purposes of the suitability test of art 25(2) of MiFID II and art 54(2) of MiFID II Delegated Regulation (EU) 2017/565 to assume that a professional client ‘has the necessary level of experience and knowledge’ to understand the risks involved, and if it concerns investment advice, to assume for the purposes of the suitability test ‘that the client is able financially to bear any related investment risks consistent with the investment objectives of that client’. Similarly, for purposes of the appropriateness test of art 25(3) of MiFID II and art 56(1) of MiFID II Delegated Regulation (EU) 2017/565, and art 55(1) of MiFID II Delegated Regulation (EU) 2017/565 permits the investment firm to ‘assume that a professional client has the necessary experience and knowledge in order to understand the risks involved in relation to those particular investment services or transactions, or types of transaction or product, for which the client is classified as a professional client’.
82 Article 64(1)(a) of MiFID II Delegated Regulation (EU) 2017/565 permits a firm in determining the relative importance of the factors referred to in art 27(1) of MiFID II Directive in the context of best execution requirements to consider ‘the characteristics of the client including the categorisation of the client as retail or professional’.
83 See on the operation of caveat emptor in the context of investment services, McMeel and Virgo (n 17) paras 1.67–1.71.
84 See Chapter 1, paras 1.15ff (discussing the professional character of the investment services relationship).
86 Niamh Moloney, EU Securities and Financial Markets Regulation (3rd edn, OUP 2014) 800.
87 Article 24(3)–(6) of MiFID II.
88 Article 24(7)(a) of MiFID II.
89 Article 24(7)(b)–(9) of MiFID II.
90 Article 24(10) of MiFID II.
91 Article 25 of MiFID II.
92 Article 24(7)(a) of MiFID II.
96 Recital 17 places the best interest rule in the context of product governance, appropriateness, and suitability protective duties. See Chapter 1, paras 1.27ff (on product governance).
97 Less so in duties to avoid and/or to manage conflicts (in particular, inducements and remuneration). The existence of a conflict does not equate to a lack of fairness, per se, see paras 4.61ff below re the risk management character of conflict rules and fiduciary duties.
99 Jan H Dalhuisen, Dalhuisen on Transnational Comparative, Commercial, Financial and Trade Law—Volume 2 (6th edn, Hart 2016) 29.
101 See Lord Browne-Wilkinson in Henderson (n 23) [205F]–[205G]; see also McMeel and Virgo (n 17) paras 8.01ff; and Colin Bamford, Principles of International Financial Law (2nd edn, OUP 2015) paras 7.29ff.
102 See Millett LJ, in Bristol and West Building Society v Mothew  2 WLR 436,  Ch 1, 18 (observing that ‘a fiduciary is someone who has undertaken to act for or on behalf of another in a particular matter in circumstances which give rise to a relationship of trust and confidence’). See for academic analysis, Paul D Finn, ‘Fiduciary Law and the Modern Commercial World’ in E McKendrick (ed), Commercial Aspects of Trusts and Fiduciary Obligations (OUP 1992) 9, and Paul D Finn, Fiduciary Obligations (The Federation Press 1977) 9 noting that ‘for a person to be a fiduciary he must first and foremost have bound himself in some way to protect and/or advance the interests of another’. See further Law Commission, Fiduciary Duties and Regulatory Rules—A Summary (1992) 1–2 observing that ‘broadly speaking, a fiduciary relationship is one in which a person undertakes to act on behalf or for the benefit of another, often as an intermediary with a discretion or power which affects the interests of the other who depends on the fiduciary for information and advice’.
103 cf Ernest J Weinrib, ‘The Fiduciary Obligation’ (1975) 25 University of Toronto Law Journal 1, 7 noting that
the reason that agents, trustees, partners and directors are subjected to the fiduciary obligation, is that they have a leeway for the exercise of discretion in dealings with third parties which can affect the legal position of their principals. … Accordingly, the hallmark of a fiduciary relationship is that the relative legal positions are such that one party is at the mercy of the other’s discretion.
See also Peter HB Birks, An Introduction to the Law of Restitution (OUP 1989) 339, noting that ‘in short, the particular harm to beneficiaries which equity chiefly fears is the harm which consists in the diversion of wealth into the fiduciary’s pocket’.
104 (1984) 156 CLR 41, 96–97.
105 249 NY 458, 164 NE 545 (1928). See for an analysis of the importance of this case, Austin W Scott, ‘The Fiduciary Principle’ (1949) 37 California Law Review 539, 548–49.
106 See Millett LJ, in Bristol and West  2 WLR 436,  Ch 1, 18 (observing that ‘the distinguishing obligation of a fiduciary is the obligation of loyalty. The principal is entitled to the single-minded loyalty of his fiduciary’). See also Peter G Watts (ed), Bowstead & Reynolds on Agency (21st edn, Sweet & Maxwell 2017) para 6-034.
107 Much cited American judicial guidance from Frankfurter J, in SEC v Cheney Corp 318 US 80 (1942), 85. American academic authority concurs: see LS Sealy, ‘Fiduciary Relationships’ (1962) 20 The Cambridge Law Journal 69, 73, (noting that ‘the mere statement that John is in a fiduciary relationship towards me means no more than that in some respects his position is trustee-like; it does not warrant the inference that any particular fiduciary principle or remedy can be applied’). Similarly, Deborah A DeMott, ‘Beyond Metaphor: an Analysis of Fiduciary Obligation’  Duke Law Journal 879, 879, and 923 observing that although ‘one can identify common core principles of fiduciary obligation, these principles apply with greater or lesser force in different contexts involving different types of parties and relationships. Recognition that the law of fiduciary obligation is situation-specific should be the starting point for a further analysis,’ and, further, that fiduciary obligations’ ‘origin in Equity and its continuing tie to Equity’s legacy make it unusually context-bound as a legal obligation’.
108 Finn, ‘Fiduciary Law and the Modern Commercial World’ (n 102) 9, noting that this summary is an adaptation of the formulation of Deane J in Chan v Zacharia (1984) 154 CLR 178, 53 ALR 417, 435.
109 See Millett LJ, in Bristol and West  2 WLR 436,  Ch 1, 18:
the principal is entitled to the single-minded loyalty of his fiduciary. This core liability has several facets. A fiduciary must act in good faith; he must not make a profit out of his trust; he must not place himself in a position where his duty and his interest may conflict; he may not act for his own benefit or the benefit of a third person without the informed consent of his principal. This is not intended to be an exhaustive list, but it is sufficient to indicate the nature of fiduciary obligations. They are the defining characteristics of the fiduciary.
See further Kelly v Cooper  AC 205,  3 WLR 936; Law Commission, Fiduciary Duties and Regulatory Rules (Consultation Paper No 124, 1992) 32.
110 See Erlanger v New Sombrero Phosphate Co (1878) 3 App Cas 1212 (on rescission) and Gluckstein v Barnes  AC 240 (on account of profits), cited by McMeel and Virgo (n 17) paras 8.14. See also Bamford (n 101) para 7.36 (observing that the fact that someone is a fiduciary may be irrelevant to many issues).
111 See Millett LJ, in Bristol and West  2 WLR 436,  Ch 1, 16, noting that the
expression ‘fiduciary duty’ is properly confined to those duties which are peculiar to fiduciaries and the breach of which attracts legal consequences differing from those consequent upon the breach of other duties. Unless the expression is so limited, it is lacking in practical utility. In this sense, it is obvious that not every breach of duty by a fiduciary is a breach of fiduciary duty. I would endorse the observations of Southin J in Girardet v Crease & Co (1987) 11 BCLR (2d) 361, 362: ‘The word “fiduciary” is flung around now as if it applied to all breaches of duty by solicitors, directors of companies and so forth. … That a lawyer can commit a breach of the special duty [of a fiduciary] … by entering into a contract with the client without full disclosure … and so forth is clear. But to say that simple carelessness in giving advice is such a breach is a perversion of words.
Similarly, Ipp J in Permanent Building Society v Wheeler (1994) 14 ACSR 109, 157, cited in agreement by Millett LJ in Bristol and West  2 WLR 436,  Ch 1, 16 as saying that it ‘is essential to bear in mind that the existence of a fiduciary relationship does not mean that every duty owed by a fiduciary to the beneficiary is a fiduciary duty. In particular, a trustee’s duty to exercise reasonable care, though equitable, is not specifically a fiduciary duty.’ See for a discussion of damages for breach of an implied equitable duty of skill and care, Chapter 5, para 5.87ff.
112 See Millett LJ, in Bristol and West  2 WLR 436,  Ch 1, 16, noting in respect of the concept of ‘fiduciary duties’ that it
113 See Lord Browne-Wilkinson in Henderson (n 23) 205, saying that the
liability of a fiduciary for the negligent transaction of his duties is not a separate head of liability but the paradigm of the general duty to act with care imposed by law on those who take it upon themselves to act for or advise others. Although the historical development of the rules of law and equity have, in the past, caused different labels to be stuck on different manifestations of the duty, in truth the duty of care imposed on bailees, carriers, trustees, directors, agents and others is the same duty: it arises from the circumstances in which the defendants were acting, not from their status or description. It is the fact that they have all assumed responsibility for the property or affairs of others which renders them liable for the careless performance of what they have undertaken to do, not the description of the trade or position which they hold, cited in agreement by Millett LJ, in Bristol and West  2 WLR 436,  Ch 1, 16.
114 The principles that govern the construction of contracts are the same at law and in equity; see Chapter 5, paras 5.01ff (on the principles of construction of contracts).
115 See also McMeel and Virgo (n 17) para 8.07, arguing that there ‘is no duplication of the same duty at common law and in equity. In the modern law the exposition of a duty of care and skill does not require differentiation between different historical foundations of the sources of such duties.’
116 Such as limits imposed by s 2(2) of the UCTA, (‘a person cannot so exclude or restrict his liability for negligence except in so far as the term or notice satisfies the requirement of reasonableness’), or COBS 2.1.2R, see Chapter 5, paras 5.36ff (on exclusion clauses in client agreements).
117 See Lord Browne-Wilkinson in Kelly v Cooper (n 109) 213–14, observing that agency ‘is a contract made between principal and agent … like every other contract, the rights and duties of the principal and agent are dependent upon the terms of the contract between them, whether express or implied’. See also Clark Boyce (n 36) 437.
118 Lord Mustill in Re Goldcorp Exchange  1 AC 74, 98.
119 See Chapter 1, paras 1.44ff (on the creation of agency powers for certain investment firms).
120 Bowstead & Reynolds on Agency (n 106) para 6-035.
121 See Weinrib (n 103) 4.
122 Deborah A DeMott, ‘Organisational Incentives to Care about the Law’ 1998 60 Law and Contemporary Problems 101, 110.
123 See the characterization by Finn of the modus of implication of fiduciary duties, as recited by Millett LJ, in Bristol and West Building Society v Mothew  2 WLR 436,  Ch 1, 18 observing: ‘As Dr. Finn pointed out in his classic work Fiduciary Obligations (1977), p. 2, he is not subject to fiduciary obligations because he is a fiduciary; it is because he is subject to them that he is a fiduciary.’
124 cf Finn, Fiduciary Obligations (n 102) 12, observing that, if the principal controls the way the service provider exercises his powers, ‘there is no compelling reason for Equity to protect him by imposing a general obligation on his functionary having a similar object’. See further for a discussion of the American doctrine, Scott (n 105) 540 (noting that ‘the greater the independent authority to be exercised by the fiduciary, the greater the scope of his fiduciary duty’), and DeMott, ‘Beyond Metaphor’ (n 107) 901 (suggesting that ‘even a designated ‘trustee’ may not have fiduciary duties if he entirely lacks authority and thus has no discretionary power’).
125 See paras 1.44ff (on the creation of agency powers for certain investment firms).
126 See Finn, Fiduciary Obligations (n 102) 10. Further, see Lloyds Bank Ltd v Bundy  1 QB 326 (the court found that the high street bank owed fiduciary duties to a retail customer since the customer had justifiably relied implicitly on the bank’s recommendation to increase the bank’s loan to a family member, which loan was secured by a mortgage on the customer’s residential property). See Bamford (n 101) paras 7.58–7.63 for an insightful discussion of the case.
127 Springwell (n 15) . See for a discussion, McMeel and Virgo (n 17) paras 8.11–8.12.
128 See Moloney (n 86) 800, and Enriques and Gargantini (n 54) para 4.73, who may possibly have been inspired by Moloney’s choice of term. See also Hudson (n 3) 10–17, who observes that
the conception of Millett L.J. that there must be a “relationship of trust and confidence” chimes … with the entire purpose of the conduct of business regulation which is that the investment firm is an organization which must act in the best interests of its client and on whose advice the client is entitled to place reliance: that is a relationship of trust and confidence, which would therefore appear to be fiduciary in nature.
129 Article 24(10) of MiFID II.
130 Notwithstanding the fact that the organizational rules relating to preventions of conflicts of interest of art 16(3) of MiFID II now include organizational rules relating to product governance. It suggests that the EU legislator is cognisant of the fact that management of conflicts of interest is part and parcel of product governance, it does not necessarily change the character of product governance as primarily an instrument aimed at ensuring suitability of the product for a target market. For a different opinion, see Stefan Grundmann and Philipp Hacker, ‘Conflicts of Interest’ in Danny Busch and Guido Ferrarini (eds), Regulation of EU Financial Markets—MiFID II and MiFIR (OUP 2017) para 7.37.
133 See art 23(1) of MiFID II, in fine, which provides that investment firms must ‘take all appropriate steps to identify and to prevent or manage conflicts of interest … including those caused by the receipt of inducements from third parties or by the investment firm’s own remuneration and other incentive structures’.
134 Keith Clark, ‘Overview’ in Keith Clark (ed), Conflicts of Interest—Jurisdictional Comparisons in the Law and Regulation for the Financial Services, Auditing and Legal Professions (The European Lawyer 2005) iii.
135 Grundmann and Hacker (n 130) para 7.03.
136 Recital (45) of MiFID II Delegated Regulation (EU) 2017/565.
138  2 AC 46. See for a discussion Bamford (n 101) paras 7.64–7.71.
139 The earlier decision in Regal (Hastings) Ltd v Gulliver  1 All ER 378, took centre stage in the considerations in Boardman v Phipps. Lord Russell of Killowen said in Regal at 144G–145A (emphasis added):
The rule of equity which insists on those, who by use of a fiduciary position make a profit, being liable to account for that profit in no way depends on fraud, or absence of bona fides; or upon such questions or considerations as whether the profit would or should otherwise have gone to the plaintiff, or whether the profiteer was under a duty to obtain the source of the profit for the plaintiff, or whether he took a risk or acted as he did for the benefit of the plaintiff, or whether the plaintiff has in fact been damaged or benefited by his action. The liability arises from the mere fact of a profit having, in the stated circumstances, been made. The profiteer, however honest and well-intentioned, cannot escape the risk of being called upon to account.
141 Article 16(6) of MIFID II and art 36 of Delegated Regulation (EU) 2017/565.
142 Rules about remuneration of staff of an investment firm and rules about ‘inducements’, ie monetary and non-monetary benefits received from or provided to third party firms by an investment firm in the context of its investment business, comprise species of conflict rules sub-paras (a) and (e), respectively, of art 33 of MiFID II Delegated Regulation (EU) 2017/565 and will be discussed separately in the sections C2 and C3.
143 Howard Davies, ‘Conflicts of Interests for Banks, Auditors and Law Firms’ in Keith Clark (ed), Conflicts of Interest—Jurisdictional Comparisons in the Law and Regulation for the Financial Services, Auditing and Legal Professions (The European Lawyer 2005) xvi.
144 Article 23(2) of MiFID II.
145 Article 34(4) of Delegated Regulation (EU) 2017/565. See further ESMA, Final Report—ESMA’s Technical Advice to the Commission on MiFID II and MiFIR (ESMA/2014/1569) 80ff.
146 Article 34 (Conflicts of interest policy) of Delegated Regulation (EU) 2017/565.
148 Commission Delegated Directive (EU) 2017/593 of 7 April 2016 supplementing Directive 2014/65/EU of the European Parliament and of the Council with regard to safeguarding of financial instruments and funds belonging to clients, product governance obligations and the rules applicable to the provision or reception of fees, commissions or any monetary or non-monetary benefits.
149 Article 11(2)(a) of Delegated Directive (EU) 2017/593.
150 Article 11(2)(b) of Delegated Directive (EU) 2017/593.
151 Article 11(2)(c) of Delegated Directive (EU) 2017/593.
152 See Walker and Purves (n 45) para 18.92.
153 See Larissa Silverentand et al, ‘Inducements’ in Danny Busch and Guido Ferrarini (eds), Regulation of EU Financial Markets—MiFID II and MiFIR (OUP 2017) paras 8.18–8.36.
154 Article 24(8) of MiFID II refers to inducement received from ‘third parties’ and art 24(9) to inducements to or from ‘any party’. Although the drafting distinction prima facie suggests that intra-group payments might not be payments from a ‘third party’, it is clear from the use elsewhere of the term ‘independent third party’ that ‘third party’ means a party other than the investment firm itself, see eg Recital 75 of MiFID II, which refers to an ‘independent third party’ as a third party ‘who has no connection with the investment firm regarding the investment service provided to the client and is acting only on the instructions of the client’. ESMA, previously CESR, confirmed that to be the position under MiFID I, see CESR, Inducements under MiFID—Recommendations (Consultation Paper No CESR 07-228b, 2007), and MiFID I best practices document, see CESR, Inducements: Good and Poor Practices (Feedback Statement No CESR/10-29619, 2010) that intra-group payments are in-scope inducements. See for a discussion Silverentand et al (n 153), para 8.10.
155 Silverentand et al (n 153), 8.40.
157 Investment firms within the meaning of 4(1)(1) of MiFID II which are authorized to provide the ancillary service referred to in point (1) of Section B of Annex I to MiFID II (safekeeping and administration of instruments), which deal on own account, underwrite, or place instruments, or which are permitted to hold money or securities belonging to their clients and which for that reason may not at any time place themselves in debt with those clients are ‘institutions’ within the meaning of Directive 2013/36/EU of the European Parliament and of the Council of 26 June 2013 on access to the activity of credit institutions and the prudential supervision of credit institutions and investment firms, amending Directive 2002/87/EC and repealing Directives 2006/48/EC and 2006/49/EC,  OJ L176/338 (‘Capital Requirements Directive’, CRD IV) and Regulation (EU) 575/2013 of the European Parliament and of the Council of 26 June 2013 on prudential requirements for credit institutions and investment firms and amending Regulation (EU) 648/2012 (‘Capital Requirements Regulation’, CRR) and therefore subject to prudential supervision under CRD IV and CRR, see art 3(1)(3) CRD IV in conjunction with art 4(1)(2)(c) CRR.
158 Article 74(3) and 75(2) of CRD IV instruct EBA to issue further guidelines on remuneration policies, see European Banking Authority, Guidelines on Sound Remuneration Policies under Articles 74(3) and 75(2) of Directive 2013/36/EU and Disclosures under Article 450 of Regulation (EU) No 575/2013 (EBA/GL/2015/22, 2016).
159 See art 92(2) of CRD IV.