The House is expected to vote on reconciliation of the Senior Safe Act as part of its larger financial services reform package next Tuesday, moving legislation designed to encourage advisors to report senior financial abuse that much closer to reality.

The law would encourage advisors and their firms to report the financial exploitation of senior clients—said to cost senior investors some $3 billion annually—by protecting them from liability and the violation of privacy laws. 

The Senate passed the Senior Safe Act in March as part of a larger financial services overhaul, following a similar move by the House of Representatives. The bills must now be reconciled in order to get to President Donald Trump’s desk for signature.

“SIFMA supports the Senior Safe Act, which will allow firms to disclose cases of potential senior financial exploitation to the appropriate entities without fear of legal ramifications,” Lisa Bleier, managing director and associate general counsel of the Securities Industry and Financial Markets Association (SIFMA), told Financial Advisor Magazine.

“We are encouraged this legislation is advancing and urge Congress to move it forward to become law,” she said.

In addition to granting legal immunity to those who report suspected abuse of seniors to regulators and law enforcement authorities, the new legislation encourages financial services firms to provide standardized training to frontline employees and producers to help them identify and report instances of suspected abuse.

The bill was introduced by Rep. Bruce Poliquin (R-Maine) and modeled on the “Senior$afe” program in Maine—a collaborative effort between state regulators, financial firms and legal organizations to educate banking and credit union workers on how to spot and help stop elder financial abuse. Hundreds of Maine financial services professionals have been trained to identify the signs of elder financial abuse.
 
“The Senior Safe Act is a big step forward in the prevention of elder financial abuse by allowing financial services firms and advisors to report potential financial abuse without fear of violating privacy laws,” Financial Services Institute (FSI) President and CEO Dale Brown said.

By granting immunity, the bill would enlist advisors, who are on the frontlines of the fight to help stem the rising tide of financial fraud against seniors, Brown said.

U.S. seniors lose an estimated $2.9 billion each year to financial fraud, according to a MetLife study.

On average, senior fraud victims are chiseled out of $30,000 each, and 10 percent lost $100,000 or more, a separate study by Allianz found. The Allianz study also reported that seniors who regularly speak about their finances with trusted third parties, including financial professionals, are significantly less likely to be fraud victims.

“Anything Congress can do to help us assist senior clients who are the victim of fraud is a move in the right direction,” said Edward J. Snyder, co-found of Oaktree Financial Advisors in Carmel, Ind.

“Anything that speeds up the process is a good thing, because some times seniors don’t have a long time,” said Snyder, who reported a case of financial abuse against a senior client to his broker-dealer in 2017. The broker-dealer froze the client’s account and reported the case to state regulators and protective services.

The American Council of Life Insurers (ACLI) has also thrown its weight behind the legislation. “By encouraging the reporting of suspected fraud, the Senior Safe Act improves the ability of companies to work with regulators to protect seniors from losing their retirement savings,” ACLI President and CEO Governor Dirk Kempthorne said.

Granting immunity to those who report suspected fraud to regulators “is extremely beneficial public policy” because it improves the ability of companies to work with regulators to protect seniors from losing their retirement savings, Kempthorne said. “It facilitates improved communication between insurance producers, life insurance companies and regulators in the event of suspected financial exploitation of senior citizens,” he said.

The National Association of Insurance and Financial Advisors (NAIFA) has also been working with lawmakers in support of the bill.  “The Senior Safe Act provides much needed protection for older investors and will allow advisors to better protect their clients’ interests,” President Keith Gillies said. “NAIFA worked hard with lawmakers to craft legislation that encourages advisors to protect their senior clients and give them mechanisms for doing so while shielding advisors who act in good faith and with reasonable care from liability.”

The financial services reform package is expected to come before the full House for a vote Tuesday, May 22.

Beyond ratifying the Senior Safe Act, the bill would ease many Dodd-Frank Act rules for small, regional and large banks. Some of the changes are designed to increase mortgage availability by relaxing underwriting standards. For the first time, credit reporting companies such as Equifax, Experian and TransUnion will be required to provide free credit freezes to all consumers who believe they’ve been hacked—and free crediting monitoring tools to active-duty military. The new requirements are fallout from the Equifax cyber attack that compromised the personal data of 148 million customers.

In exchange, members of the military will be required to waive their right to sue credit reporting agencies if something goes awry with monitoring. Another trade off for consumers in the bill: credit reporting agencies will soon be able to market an even deeper dive into Americans’ personal data in the form of a new credit scoring system they hope will become a requirement for home borrowers and mortgage lenders.