Mis-selling financial products
Georgia Dawson and Peter So, of Freshfields Bruckhaus Deringer, give an update on the mis-selling of financial products in Hong Kong
The terms and conditions in the standard account opening agreements between banks and customers have been the subject of litigation when things go wrong. Some of the most common clauses are looked at today - non-reliance clauses.
Non-reliance clauses describe a set of declarations to the effect that (i) the customer accepts all the risks arising from the making of an investment; (ii) the bank is not offering investment advice to the customer; and (iii) the customer is not relying on the bank's advice or representations (even if provided) and the customer makes an independent judgment when making an investment. They typically exist in banks' standard account opening documentation for execution-only accounts (meaning the bank will simply follow the customer's instructions to execute trades and not act as the customer's investment adviser).
The purposes of non-reliance clauses are to protect the bank against liabilities arising from representations made by the bank during the process of the sales of financial products by preventing the customer from relying on those representations.