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An elderly couple in their 70s, with failing health had their life savings on deposit but were approached by their banks investment advisor and advised
- An elderly couple in their 70’s, with failing health had their life savings on deposit but were approached by their bank’s investment advisor and advised that they would get a much better return if they took the money off deposit and invested it in an offshore fund instead. The couple invested 345,000 pounds in this fund. Two years later, the couple were contacted by the bank and were advised to switch the investment into cash as the fund was losing heavily in value. The couple said that it was only after a subsequent meeting with the manager of the bank’s local branch did they fully understand how the investment functioned and only then were they made aware that 70% of the investments were based on stock market performance. The fund was also poorly managed and unregulated. The couple said that had they known this at the outset, they would not have entered into such an unsuitable investment and so they sought legal action against their bank to have the amount of 345,000 pounds returned to them. They claimed that the bank did not act in good faith, was in breach of its fiduciary duty to its customers and failed to exercise a duty of care by doing the necessary due diligence on the fund.
- Is the elderly couple entitled to make such a claim against their bank? Give reasons for your answer.
- What are the key requirements for fiduciaries?
- Which landmark English common law case first imposed the liability for negligent misrepresentation on banks? Briefly explain the case and its ruling.
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