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  • Print publication year: 2013
  • Online publication date: June 2014

8 - Products, promotion and client relationships


One of the suggestions raised in the last chapter was that, providing banks and other financial institutions get their fees, they are not overly concerned what happens to their clients. This may be unfair, but it resonates with the public. Time and again, the financial sector is charged and found guilty by its regulators of promoting and selling dodgy products and services of one kind or another. The list is so long that we cannot feasibly analyze each case individually, but the cases also differ in significant ways, so we cannot just analyze them as a class. We shall begin by running through some of the main areas of concern, highlighting the concerns that have been voiced and using boxes to describe a particular case of each kind in more detail. We shall then review some of the ethical issues raised, passing quickly through those that lend themselves to a relatively straightforward application of normative ethics, but looking more closely at factors that make some of these cases much more difficult to decide. We shall focus in particular on the issue of negligence, in respect of either the product or the welfare of the client, and on the issue of misrepresentation, where this falls short of outright lies.

Picking up on the questions raised in the last chapter around over-trading, we shall begin our survey with the promotion of fund management services. We shall then look at the promotion of retail financial products, the selling of complex derivatives to the corporate sector and two features of the promotion of common stocks: sell-side research and IPOs. We shall finish with the promotion of potentially illegal or unethical products, such as shares in fraudulent ventures, and avowedly ethical products.

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