Pearson Quoted in The New York Times on Fiduciary Obligations for Financial Institutions

Manatt Financial Services Leader was quoted in The New York Times on whether banks and other financial institutions can be held liable for not alerting their existing customers about more favorable products they could apply for. 

According to the article, the Consumer Financial Protection Bureau sued a bank for allegedly failing to inform customers about its new high-yield savings account, claiming it misled customers and intentionally created confusion so that they wouldn’t know to switch to a higher-paying account. However, Pearson noted that banks aren’t expected to notify customers every time they are eligible for one of its services, such as refinancing a mortgage.  

“There’s lots of case law saying that financial institutions don’t owe fiduciary obligations to their customers,” he said. “I don’t know why anyone would think that it’s the bank’s job to tell you that you can get a better deal somewhere else or that they’ll give you a better deal. That is just kind of a shocking and unprecedented theory in my view.” 

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