As China has seen its wealth management industry going crazy recent years, alarm bell is now ringing with China central bank together with other financial supervisory watchdogs just issuing a draft of rules that are aiming to rein in the market and control financial crisis.
Wealth management products most take the form of investors placing funds in the hands of the management institutions such as a bank, trust company, private equity fund, securities companies for purpose of gaining profits.
If something goes wrong with the products which have happened in China in the past, for example, a trust fund put into a real estate development project was unable to recover money as expected, a fundamental question shall be raised as to what kind of legal relationship shall be found between investors and the product managers.
New as it is in China, wealth management industry should be there in UK for decades or if not centuries. I would like to hear your thoughts on the issue and would like to receive some suggested precedent cases that have shaped what it is like in today’s UK.
My understanding of the issue is that there should be a general trust legal relationship between investors and managers despite whatever institutions serving as the product managers and despite that the parties have not expressly intended their relationship to be that of a trust.
With that, the focal point in such disputes is to find out whether the manager has duly discharged its fiduciary duties in managing the products.
Waiting for your thoughts on this and your suggested case precedents. Thanks…
Jason Tian
Dentons Shanghai