Property Alliance Group v Royal Bank of Scotland [2016] EWHC 3342 (Ch)
Citation: Property Alliance Group v Royal Bank of Scotland [2016] EWHC 3342 (Ch)
Rule of thumb: What is the basic legal obligation incumbent on investors? They have to advise the person on the risk of the products they will be investing in, and agree the level of risk before this is done.
Judgment:
When a bank is actually selling investment products to a client, then there is a duty to provide very basic advice, which falls at the very low end of the spectrum of financial advice. This is different from general commercial banking and debt where no advice is required to be provided at all, although this standard of advice is certainly not as stringent the standard of advice required in other professional services. The facts of this case were that PAG had bought ‘interest rate swaps’, a financial product, from RBS. RBS were part of a group of banks rigging the LIBOR rate and this impacted negatively on the value of these products. It was held that there was a basic duty upon RBS to advise about this LIBOR rate rigging before the financial products were being sold, “... there is... a ... broader duty of care... not to... explain fully... but fact dependent ... a duty falling on the advisory spectrum’, Asplin J
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