Fiduciary duties of investment intermediaries

January 15 2015


  • Professor John Kay

  • Rajiv Jaitly (Jaitly LLP)

  • Tamara Goriely (Law Commission)

  • Guy Sears (Investment Association)



At least four of the recommendations that John Kay made in his influential July 2012 review of UK equity markets concerned the fiduciary duty of those who manage or advise on the investments of others. One of them (Recommendation 9) specifically asked the Law Commission to review the legal concept of fiduciary duty “to address uncertainties and misunderstandings on the part of trustees and their advisers”.

This, the Law Commission did – publishing a final report last July.

In the Commission’s view, statutory reform of the general law of fiduciary duty is not necessary – in part, because existing law is sufficiently flexible to take account of non-financial factors, and in part because the courts have not interpreted ‘fiduciary duties’ to mean exactly what Prof. Kay had in mind. That, however, has not been the end of the story. A recent research report on fund costs and charges – commissioned by the Financial Services Consumer Panel and authored by Rajiv Jaitly – has challenged the Law Commission’s conclusions on the need for statutory reform, arguing that “[t]here is an urgent need to reconsider the case for… imposing the duties of a fiduciary on investment managers in relation to retail investors.”

And that is where the issue stands today… We are, therefore, delighted to have been able to put together an exceptionally well-qualified panel to discuss the problem (if it is a problem) and potential solutions:

  • Professor John Kay is the eponymous author of the Kay Report – which, it should be remembered, was endorsed by the government pretty much in its entirety. He is a prolific writer on economics and finance, and remains a Fellow at St. John’s, Oxford – a post to which he was elected at the embarrassingly early age of 21.

  • Tamara Goriely leads the commercial and common law team at the Law Commission – and led the team working on the Commission’s report into fiduciary duties. She was formerly at the Institute of Advanced Legal Studies, and has published widely on a range of legal issues.

  • Rajiv Jaitly is a chartered accountant and licensed insolvency practitioner. Prior to founding his own consultancy in 2009, he was managing director and chief risk officer of Santander’s Alternative Investments Group, and chief operating officer and deputy global head of the fund of hedge fund business AXA Investment Managers. He was also a member of the expert panel that advised the 2013 OFT study into workplace pensions.

  • Guy Sears is director for risk, compliance and legal at the Investment Association, where he leads the team on regulatory, operational and legal issues for asset managers and funds.

This may sound a tad esoteric, but the problems around fiduciary responsibility go to the heart of the City’s role as Europe’s investment management centre.