Financial services companies are now allowed to place temporary holds on disbursements of funds or securities from a customer’s account when there is a reasonable belief of financial exploitation of these customers. In addition, an amendment to FINRA Rule 4512, which governs the way customer account information is collected and stored, now requires financial companies to make reasonable efforts to obtain the name and contact information for a trusted person for a customer’s account.
In explaining the reasoning behind the changes, the FINRA Regulatory Notice says: “With the aging of the U.S. population, financial exploitation of seniors is a serious and growing problem.”
For our attorneys at Geyer Law, this is hardly “new news”. As Indiana elder law attorneys, we join the Indiana Attorney General, the FBI, and now FINRA in constantly preaching the need for vigilance in fighting scams that target senior citizens.
“As an individual ages, his risk for financial exploitation increases dramatically,” financial planning certificant Tom McAllister reminds blog readers. The National Adult Protective Services Association defines “financial exploitation” as occurring when a person misuses or takes the assets of a senior or other vulnerable adult for his own person benefit. Exploitation may involve:
- false pretenses
- has occurred
- is occurring
- has been attempted
- will be attempted
As FINRA explains in the regulatory notice, if a financial advisor “suspects that a customer is suffering from Alzheimer’s disease, dementia, or other forms of diminished capacity.” That advisor could reach out to the trusted contact person to address possible financial exploitation. At FINRA, the Financial Industry Regulatory Authority, the new rules are all about protecting seniors.