Tag Archives: best interest of the client

Best Interest of the Client

A little parable.

My brother is a lawyer and I am a doctor.  We both needed a new car but being very busy professionals did not have the time to find a suitable model.  We engaged the services of Joe the car broker.  Joe would find out what we were after and choose a car within our budget.  Neither my brother or I knew much about cars and we both wanted to spend about the same amount so we spoke to Joe.  We each signed a broker agreement with Joe, and off he went.

Joe called me a week later and said ‘How would you like a Ferrari?”  I didn’t think I could afford it but Joe assured me it was a good, second hand model with low miles and a great price.  He had a mate who owned “Formula One Ferrari Auto” or FOFA for short.  The car was a beautiful shade of yellow.  I went for a test drive and was sold.  My brother was impressed to.  Even more impressed when Joe told him there was an identical yellow Ferrari at FOFA, and he could have it for the same price.  Two happy customers.

A few months later, a few things started to go wrong like the engine, gearbox, wheels falling off, no brakes.  We decided the delicate shade of yellow was definitely lemon.  ‘Sue Joe’ was the call from my brother.

We had our day in court. My case was first.

‘According to this agreement’ said the Judge, ‘ Joe was to find you a car for a certain amount of money, and that is what he did. Not guilty.’

My brother the lawyer was next.

‘Looks like the same case.’ said the Judge.

‘Not quite.’ said my brother. ‘You notice I added a clause at the bottom when we signed.  “The broker must act at all times in the best interest of the client.”  This car was not in my best interest and Joe knew it was a lemon.’

‘Good point.’ said the Judge. ‘Joe you are guilty of not acting in the best interest of the client. Take him away and have him shot at dawn… if that is not too early for the firing squad.’

The point of the parable?  You can have an agreement to provide a service, but if you don’t explicitly state it has to be in the best interest of the client, by default it is in the best interest of the service provider.  Nothing too complicated about that.  The financial services industry wants to remove the “best interest of the client” condition from the FOFA reforms.  By default it will mean all contracts will become “in the best interests of the financial services company”.

I really don’t understand how it has been sold without causing a major public uproar.  Is it now fair for lawyers, doctors,  nurses, even churches and charities to not act in the best interest of their clients?  In fact is it now OK for the politicians we elect to not act in our best interests?