Federal privacy laws should be clarified to protect financial advisers who tell authorities about suspected financial exploitation of the elderly, a Senate leader on senior issues said Wednesday.
Sen. Susan Collins, R-Maine, chairwoman of the Senate Aging Committee, said giving safe harbor to financial firms would help address the growing problem of elder financial abuse.
“If they report in good faith, it seems to me they need some sort of protection, or many of them are not going to be willing to report,” Ms. Collins told reporters after a committee hearing.
Financial advisers should be motivated rather than mandated to report instances of aging clients' being taken advantage of by relatives or other scammers, she said.
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“There may be a need for new legislation that encourages reporting by financial institutions to prosecutors, [Adult Protective Services], federal or state financial regulators if, in good faith, the institution sees a pattern that leads them to believe there is abuse,” Ms. Collins said.
Her state has created a model for such a notification system. In testimony before the committee, Maine securities administrator Judith Shaw
outlined Senior$afe, a state initiative designed to train financial professionals to detect and report senior financial abuse.
The Maine program, a partnership between banks, credit unions, financial regulators and agencies for the aged, was launched a year ago. So far, 210 bank and credit union employees have been trained, and 20 referrals have been made to Maine's Adult Protective Services.
“This is a community problem that requires a holistic, community solution,” Ms. Shaw said in prepared testimony. “The benefits of this type of reporting and referring are far-reaching. It results in improved safety in the community for seniors and other customers of the financial institution. “
Programs like Maine's could appear in other states and more directly involve financial advisers. A leader in the North American Securities Administrators Association, Ms. Shaw said program details have been provided to regulators in other states.
Sen. Thom Tillis, R-N.C., told Ms. Shaw he would like her to come to his state, which has a quickly growing elderly population, and brief lawmakers on the Maine initiative.
“It's a great story that needs to be replicated,” Mr. Tillis said.
NASAA has made
elder financial abuse a priority this year, as incidents are growing along with the aging U.S. population. She was pleased that the Senate Aging Committee focused on the topic in its first hearing of the new Congress.
“It does have momentum in Washington,” Ms. Shaw said after the hearing. “I think it has momentum everywhere. It's an issue whose time has come. People finally realize the severity of it, the epidemic nature of it and its importance.”
During the hearing, Sen. Elizabeth Warren, D-Mass., pointed out another way she said the elderly are ripped off: Clients are often put into high-fee retirement investments that line advisers' pockets but diminish customers' retirement prospects, she said.
“We need to do more to protect our seniors, but also particularly to make sure that financial advisers don't steer their clients into retirement products that maximize the advisers' profits while they drain away the clients' savings,” Ms. Warren said.
The Department of Labor has said it will re-propose this year a fiduciary duty rule that would require more advisers to retirement plans to act in the best interest of their clients.
