The Wealth Finance Brief – November 2016
In this edition of The Wealth Finance Brief we have sought to highlight the recent developments in the legal world which we think are of most relevance to private bankers.
First of all we take a look at a recent case where the extent of the duty of care which a private banker owes to its client came under scrutiny by the High Court.
In our second article, we raise the highly topical subject of e-signatures and analyse the English law position as it stands.
We provide a brief overview of "bail-in" clauses, setting out what these are and the circumstances in which contractual recognition is required.
Finally, we have taken the opportunity to highlight an important change to the scope of the High Net Worth Exemption which arose in March this year as a consequence of the implementation of the Mortgage Credit Director 2014/17/EU. This will be of particular relevance to any lenders who provide loans to individuals in relation to, but not necessarily secured by, property.
Hannah Rowbotham, Editor
Private Banker's Duty of Care
The case heralds a new approach by the courts to the traditional duty of care imposed on financial advisers when advising their clients (the "Bolam test") and places more responsibility on a properly informed investor to accept the consequences of the investment risks voluntarily assumed by him or her.
The validity of e-signatures
A recent Note issued by a joint working party of the Law Society and the City of London Law Society1 has done much to increase confidence in the validity of electronic (or "e"-) signatures. A short explanation of the position under English law and a minor word of warning may assist.
Most contracts can be made electronically, for example by e-mail or web-site trading, but uncertainty can arise where English law requires some additional formality for a contract or instrument, including that it be "signed".
Contractual Recognition of Bail-in
Brexit has redirected and sharpened the focus of many on matters which, Brexit aside, might not have merited as much attention. One of those matters is the contractual recognition of bail-in in loan documents (and other documentation). We give a quick overview of what it is, why and when it is needed and what documents it affects.
The High Net Worth Individuals Exemption
The Mortgage Credit Directive, which was introduced as of March 2016, has limited the availability of the "HNWI exemption" for consumer credit agreements. The effect is that loans which previously fell within the exemption may no longer do so, and the lender must now be authorised before it can enter into such loans. We detail below the changes and those loans which will no longer be exempt.
We will be back in the next quarter with a new edition of The Wealth Finance Brief. If there is a specific issue or topic within in the private banking sphere that you would like us to report on in our next edition, please do let us know.
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