The Senate passed the Senior Safe Act as part of its larger financial services reform package on Wednesday, moving the legislation that much closer to reality. The bill would protect advisors and firms that report the financial exploitation of senior citizens from liability and violations of privacy laws.
The bill also encourages financial services firms to provide standardized training to front-line employees and producers to help identify and report instances of suspected abuse, which is an important piece of the legislation, according to the Financial Services Institute (FSI), an organization representing the independent broker-dealer industry. which is encouraging the House to pass similar legislation.
“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,” FSI President and CEO Dale Brown said.
FSI and other groups supporting the measure are urging the House to pass similar legislation, he said.
“We urge the House of Representatives to pass this critical legislation in a timely manner to help ensure our nation’s seniors are protected from abuse,” Brown added.
By granting immunity, the bill is designed to enlist advisors in the fight to help stem the rising tide of financial fraud against seniors. A 2011 MetLife study estimates that U.S. seniors lose about $2.9 billion each year to financial fraud.
A separate study by Allianz found that senior fraud victims lost an average of $30,000 each, and 10 percent lost $100,000 or more. The study also found that seniors who regularly speak about their finances with trusted third parties, including financial professionals, are significantly less likely to be fraud victims.
The American Council of Life Insurers (ACLI) has also thrown its weight behind the legislation. “By encouraging the reporting of suspected fraud, the Senior [S]afe 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.”
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.”