[Draft 1] - Protecting Clients In Financial Transactions

[Simone Republic]

Motivation

Replacement for both 642 and 746 if repeals go through. Since my own writing style has improved a bit (a wee bit I think), the reading should be smoother.

GA642: https://www.nationstates.net/page=WA_pa ... /council=1
GA746: https://www.nationstates.net/page=WA_pa ... /council=1

The World Assembly (WA),

Noting the repeal of GARs 642 [and 746],

Believing that protection for savers and investors remain necessary across WA states, especially when someone invests overseas;

The WA enacts as follows:

1. Definitions. In this resolution:
   
   1. "Advisor" specifically refers to competent professionals in financial instruments retained by a client and acting with sole fiduciary duty only to that client. "Advisor" includes directors and employees of the client.
   2. "Client" means a client of an institution, including both individuals and entities. For clauses (2) to (5), "client" excludes one institution transacting with another.
   3. "Financial instruments" means anything transacted by an institution, such as bonds, stocks, derivatives, funds, and insurance policies;
   4. "Institution" includes banks, insurers, stockbrokers, asset managers, and other entities providing financial services, either in a WA state or serving individuals under the jurisdiction of a WA state.
2. Fiduciary duty. An institution has a fiduciary duty to a client. An institution shall, at all times:
   
   1. Act in good faith and in the best interests of the client;
   2. Exercise full duty of care of the client;
   3. Enforce fiduciary duty on trusted counterparties, such as trustees and custodians.
3. Know-your-client. The onus is on the institution to demonstrate that it understands the following circumstances of a client (and, if it does not, to decline to transact with that client):
   
   1. A client's up-to-date financial standing and risk appetite; and
   2. The experience, skills, and professional training of that client in financial matters, or the qualifications of any advisors.
4. International transactions.. The onus is on the institution to:
   
   1. Understand the client's circumstances if a client is from a state other than the institution's home state;
   2. Ensure that the client understands the risks associated with a cross-border transaction;
   3. Ensure that a client retains legal and accounting advice if desired by the said client.
5. Prudence. The onus is on the institution to ensure that, prior to undertaking a transaction, that the client:
   
   1. is fully capable of, and has fully understood, the risks of a financial instrument; or
   2. has retained advisors and has received fully qualified advice.
6. Disclosures. To retain the confidence of clients, the onus is on the institution to fully disclose all pertinent details, and to ensure that such disclosures are up-to-date, regarding:
   
   1. all financial instruments transacted prior to a transaction (and any pertinent updates), in particular the nature, structure, and risks associated with the said instruments;
   2. all potential or actual conflicts of interest on the part of the institution (or anyone acting on its behalf);
   3. the institution's own financial standing, available resources (including risk management, information technology, and human resources), and risk control measures.
   4. Disclosures shall not be misleading, biased, or materially deceptive.
7. Interpretation.
   
   1. Terms used in the singular include the plural. Individuals may include families, partnerships, societies, and other gatherings of individuals.
   2. Each WA state is responsible for the enforcement and interpretation of this resolution.

Co-author: Imperium Anglorum

Char count: 3,387

[Bananaistan]

Stupid people can't have bank accounts is a contradiction of one of you other resolutions.

[Simone Republic]

Stupid people can't have bank accounts is a contradiction of one of you other resolutions.

GA733 clause (4)(a) requires a basic bank account for everyone (so that includes those with mental acuity issues). This resolution requires that banks understand if they have a client with mental acuity issues (implying that they need to make adjustments, say sticking to simpler savings products), not whether they actually have a client relationship or not. But I can remove that because it should be quite obvious.

[The Ice States]

"It would seem clearer to directly say that financial institutions must take certain actions, instead of saying that the onus is on them to do so. Likewise, 'not to' in Section 3 would be clearer than 'to decline to'. Additionally, a formatting error is present in the heading to Section 4. Otherwise, the Eternal Union has no objection to the writing of this proposal."

~Samuel Rothmann,
Senior WA Representative,
The Eternal Union of Devonia and the Ice States.

[Desmosthenes and Burke]

Stupid people can't have bank accounts is a contradiction of one of you other resolutions.

GA733 clause (4)(a) requires a basic bank account for everyone (so that includes those with mental acuity issues). This resolution requires that banks understand if they have a client with mental acuity issues (implying that they need to make adjustments, say sticking to simpler savings products), not whether they actually have a client relationship or not. But I can remove that because it should be quite obvious.

OOC: As an aside, it is possible to UNDERSTAND something without CARING about something or taking any particular action in response to that fact. For instance, it is perfectly possible to understand that socialists would generally lack the proper mental acuity and mindset to make sound investments. That does not obligate me to prevent them from doing stupid things, like wasting their money investing in Solyndra.

[Bananaistan]

Stupid people can't have bank accounts is a contradiction of one of you other resolutions.

GA733 clause (4)(a) requires a basic bank account for everyone (so that includes those with mental acuity issues). This resolution requires that banks understand if they have a client with mental acuity issues (implying that they need to make adjustments, say sticking to simpler savings products), not whether they actually have a client relationship or not. But I can remove that because it should be quite obvious.

"The bigger issue then is that the bank has to subject everyone to all sorts of psychological testing to assess the mental acuity of the client and then just hold that information on file. I know you liberals are all for trampling all over people's rights and privacy but this takes the biscuit."

[Simone Republic]

GA733 clause (4)(a) requires a basic bank account for everyone (so that includes those with mental acuity issues). This resolution requires that banks understand if they have a client with mental acuity issues (implying that they need to make adjustments, say sticking to simpler savings products), not whether they actually have a client relationship or not. But I can remove that because it should be quite obvious.

"The bigger issue then is that the bank has to subject everyone to all sorts of psychological testing to assess the mental acuity of the client and then just hold that information on file. I know you liberals are all for trampling all over people's rights and privacy but this takes the biscuit."

I'd cut it. The line is to catch signs of dementia (which is actually quite standard)

Bangs head