Two senators introduced bipartisan legislation Thursday that aims to cut down on elder abuse by encouraging advisers and the financial institutions they work for to report potential financial fraud targeting American seniors.
The Senior Safe Act of 2015 is sponsored by Senators Susan Collins, R-Maine, and Claire McCaskill, D-Mo., the chairwoman and ranking member, respectively, of the Senate Special Committee on Aging.
The Act would protect banks, credit unions, investment advisers and broker-dealers and their employees from civil or administrative liability, as long as employees receive training in how to spot and report predatory activity and reports are made “in good faith” and “with reasonable care,” according to the bill.
Current bank privacy laws make it difficult for these entities to report any potentially fraudulent activity, according to a news release from Ms. Collins. Indeed, only one in 44 cases of financial abuse is ever reported, according to the National Adult Protective Services Association.
The MetLife Mature Market Institute estimates annual financial loss of $2.9 billion due to elder financial abuse.
The legislation “will empower and encourage our financial service representatives to identify warning signs of common scams and help stop financial fraud targeting our seniors,” Ms. Collins said.
It's based on Maine's Senior$afe program, an initiative launched last year that's designed to train financial professionals to detect and report senior financial abuse.
In a letter to Sens. Collins and McCaskill, Judith Shaw, Maine's securities administrator and president of the North American Securities Administrators Association, commended the proposed legislation.
The bill will “[remove] barriers that might otherwise frustrate the reporting of such exploitation to state securities regulators and other appropriate governmental authorities,” Ms. Shaw said.
"Elderly Americans stand to benefit directly from such reporting, because early detection and reporting can minimize their financial losses from exploitation, and because improved protection of their finances ultimately helps preserve their financial independence and their personal autonomy," Ms. Shaw said.
The proposed legislation also comes on the heels of activity among industry groups and regulators to strengthen financial protections for seniors.
Last month, the Financial Industry Regulatory Authority Inc.'s board authorized the regulator to propose a rule to help protect senior investors by requiring broker-dealers to obtain the name and contact information of a trusted person for customers' accounts. It would also allow firms to freeze senior investors' accounts when there's reasonable belief of financial fraud.
NASAA also last month proposed model state legislation that would mandate disclosures to state regulators and adult protective services if there's reasonable belief of elder financial abuse. Rules also would allow brokers and advisers to contact trusted third parties or delay fund disbursement for seemingly at-risk seniors. The comment period for the proposed NASAA rule ended Thursday.