Post-Contractual Duties of Financial Institutions Regarding Wealth Management Products

Abstract

Since the global financial crisis, Asian regulators have strived to curb the misselling of wealth management products by strengthening product disclosure, enhancing suitability assessments and conducting product intervention. However, much less attention has been paid to financial institutions’ post-contractual duties after selling a product. This article examines various issues that might arise during the post-contractual stage of a structured wealth management product, which may include a margin call, notification of a material adverse event and advice on redemption or settlement. By drawing on product documentation available in the public domain, disputes occurring in various jurisdictions and relevant judicial decisions, this article suggests that there could be a potential gap between contractual protection and regulatory rules in the post-contractual stage that we should further elaborate upon to clarify the rights and obligations of financial institutions and their customers.