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The Law Offices Of Kyle Robbins, PLLC

Financial Industry Watchdog Enacts New Rules to Help Seniors

  • Published: March 12, 2018
Financial Industry Watchdog Enacts New Rules to Help Seniors

“The FINRA has instated two new rules this week to combat financial abuse and fraud against the elderly and other vulnerable adults.”

FINRA, the Financial Industry Regulatory Authority, has instituted two new rules to help thwart elder financial abuse:

  1. Financial advisors must now make every reasonable effort to get the name and contact information of a trusted person for a senior customer; and
  2. Financial advisors must now place a temporary hold and not disperse funds, if the adviser thinks that the senior investor may be the victim of financial exploitation. If this happens, the adviser must contact the trusted contact, while the funds are on hold.

Wealth Advisor says in its recent article, “These new rules will help protect seniors against fraud,” that the regulations are now in effect.

FINRA’s Securities Helpline for Seniors was the impetus for the enactment of these rules. More than 12,000 calls were made to the helpline on fraud and exploitation in the past three years, the self-regulator said. They recovered $5.3 million in voluntary reimbursements to customers.

Research shows that financial abuse is the second most frequently-reported type of abuse against the elderly. The most common is psychological abuse, according to a recent study of people 60 and older published in the journal Lancet Global Health.

The new rules should have a great impact on the safety of the elderly and their assets, because it may reduce the risk of the elderly losing funds they won’t be able to get back.

Advocates for the elderly say still more needs to be done, such as mandating that the financial industry develop personnel training, so staff know what to look for and can be proactive before a possible breach.

The FINRA rule stipulates that the absence of a trusted contact person’s name or information doesn’t keep an adviser from opening or maintaining an account, provided he or she has tried to obtain the information of a trusted contact. The advisers will also have to update the contact information regularly, along with the customer’s records.

There are other ways advisers can help fight elder financial abuse. One is to know the signs: the elderly may seem more submissive or fearful toward new people, or aggressive family and friends. Another is a senior who may make abrupt changes to financial documents, like their will or deed, or they have unusual changes to their financial management habits—like trying to wire large sums of money or establish new joint accounts.

ReferenceWealth Advisor (February 12, 2018) “These new rules will help protect seniors against fraud”

Kyle Robbins

About the Author Kyle Robbins is the founder and sole owner of The Law
Offices of Kyle Robbins. He received his J.D. with honors from
the University of Texas School of Law and his B.S. in Food
Chemistry and Microbiology from Oklahoma State University.