Every day that goes by without the proper safeguards in place to protect elderly investors presents a window for unscrupulous scam artists.
Even in a crucial election year, there are some issues that simply cannot wait. Financial exploitation of our senior citizens is one such issue. As financial advisers are well aware, every day that goes by without the proper safeguards in place to protect elderly investors presents a window for unscrupulous scam artists and others to deplete our seniors' hard-earned savings and put their retirement security at risk.
That is why the Financial Services Institute was so proud to play a key role in the passage of the Senior Safe Act in the House of Representatives last month. Based on legislation written by Senators Susan Collins (R-Maine) and Claire McCaskill (D-Mo.), the act would enable concerned financial advisers and firms to report signs of possible elder financial abuse to federal or state securities regulators, law enforcement and other covered agencies without fear of being held liable for violating federal privacy laws. It would also help advisers receive the standardized training they need to spot signs of potential financial exploitation.
FSI got involved to help champion the act soon after it was introduced last year. Our support of the measure and our consistent dialogue with members of the House Financial Services Committee led us to believe this bill stood a very good chance of passing.
We also made the Senior Safe Act a core focus of our annual Capitol Hill Day, which brings FSI members from all across the country to Washington, D.C., to speak to their representatives in Congress about the legislative and regulatory issues that impact them and their clients.
Throughout Capitol Hill Day, which was held on June 15, legislators heard directly from more than 100 advisers and firm executives who form the first line of defense against elder financial abuse regarding the obstacles they confront every day in their efforts to protect their clients. One of our adviser members recounted his experience in seeing an elderly client's own son repeatedly drain money from the client's account. Although the adviser wanted to sound the alarm, he found himself overwhelmed by the risk of potential privacy law violations, which could have carried severe repercussions for him and his practice.
With solid bipartisan support behind the Senior Safe Act and our members' own in-person testimonials on the need to protect elderly investors, the bill was quickly passed out of the Financial Services Committee by a 59-0 vote and received a vote on the House floor, where it passed unanimously on July 5.
While the act's passage in the House is unquestionably a victory for our nation's vulnerable senior investors, there is still much more to do.
To date, the Senate version of the act has not received a vote, despite unanimous bipartisan support in the House. We are working to build support for the bill in the upper house, and we urge the Senate Banking Committee to pass this crucial legislation and introduce it for a floor vote as quickly as possible. FSI has also issued a call to action to our members around the country to contact their senators and encourage them to pass the bill in its current form as soon as possible.
There is also much work to be done in the states. While the House version of the Senior Safe Act would ensure civil and administrative immunity from federal privacy laws for advisers and firms who report possible elder financial abuse, it will be up to individual states to develop and implement laws that provide similar safe harbors from state-level privacy statutes, in order to ensure consistency with federal law and minimize confusion.
FSI has been working with state regulators and legislators around the country to put such laws in place. We are pleased that Alabama, Indiana and Vermont have recently implemented laws based on a model rule developed by the North American Securities Administrators Association (NASAA) which requires financial advisers to report instances of suspected elder financial abuse while also providing them with immunity from civil liability under state privacy laws. Delaware, Missouri and Washington already have similar elder financial abuse laws in effect. A similar law in Louisiana will take effect early next year.
With the passage of the Senior Safe Act in the House, it is now time for our leaders in the Senate and in statehouses across the country to follow suit to protect our valued seniors. FSI is proud to have played a crucial role so far in raising awareness of the need to provide financial advisers and firms with the right tools and protections to reduce — and someday, we hope, to eliminate — the scourge of elder financial abuse.
We and our members look forward to working with legislators and regulators across the country to drive further progress on this crucial issue in the weeks and months ahead.
Dale Brown is president and chief executive of the Financial Services Institute Inc.
