Regulators have backed a rule to force advisors to speak out about cases of abuse. But is it fair?
State regulators in the USA have approved a proposal by the North American Securities Administrators Association which suggests that qualified members of advice and brokerage firms should report cases of abuse towards the elderly.
The ruling now passes to individual states to either push the proposal through as regulation or enact it as legislation. It will apply in all cases in which there can be “reasonable belief” that abuse has been committed towards clients aged 65 or over. It will also apply to younger clients who suffer from mental disabilities. No penalties have yet been established for non-compliance.
So should the rule be implemented here in Canada too?
Sean Harrell, senior advisor at Howe Harrell & Associates, believes it’s up to advisors to report these incidents irrespective of an official law.
“When we come across a case where we suspect one of our elderly clients is being taken advantage of financially by a family member or friend we take extra caution in exercising their wishes,” he said. “A law providing some extra time to exercise this precaution could make things easier.
“We spend extra time with the client to make sure that the withdrawal is in their best interests and that they are not being influenced by someone. Sometimes when we deal with elderly clients they have elected a Power of Attorney that can make decisions about their accounts, typically this is one of their children. We also take extra precaution with these transactions to ensure they are in the client’s best interests.
“I think having a law stating that advisors must report suspicions of such abuse is a great idea but I would be disappointed if advisors weren’t already reporting these issues regardless of if it is or isn’t currently law.”
The ruling in the US is set to permit notification of third parties as long as they were agreed on by the client. Advisors and broker-dealers would also be permitted to delay disbursements by as much as 15 days in cases where they suspect exploitation or fraud. A further extension can be requested by adult protection services and state regulators.
In addition, the rule will grant immunity to advisors and broker-dealers from both civil and administrative liability during cases of delayed disbursements.
What do you think of the proposal? Would you like to see it implemented in Canada? Leave a comment below and join the debate.
The ruling now passes to individual states to either push the proposal through as regulation or enact it as legislation. It will apply in all cases in which there can be “reasonable belief” that abuse has been committed towards clients aged 65 or over. It will also apply to younger clients who suffer from mental disabilities. No penalties have yet been established for non-compliance.
So should the rule be implemented here in Canada too?
Sean Harrell, senior advisor at Howe Harrell & Associates, believes it’s up to advisors to report these incidents irrespective of an official law.
“When we come across a case where we suspect one of our elderly clients is being taken advantage of financially by a family member or friend we take extra caution in exercising their wishes,” he said. “A law providing some extra time to exercise this precaution could make things easier.
“We spend extra time with the client to make sure that the withdrawal is in their best interests and that they are not being influenced by someone. Sometimes when we deal with elderly clients they have elected a Power of Attorney that can make decisions about their accounts, typically this is one of their children. We also take extra precaution with these transactions to ensure they are in the client’s best interests.
“I think having a law stating that advisors must report suspicions of such abuse is a great idea but I would be disappointed if advisors weren’t already reporting these issues regardless of if it is or isn’t currently law.”
The ruling in the US is set to permit notification of third parties as long as they were agreed on by the client. Advisors and broker-dealers would also be permitted to delay disbursements by as much as 15 days in cases where they suspect exploitation or fraud. A further extension can be requested by adult protection services and state regulators.
In addition, the rule will grant immunity to advisors and broker-dealers from both civil and administrative liability during cases of delayed disbursements.
What do you think of the proposal? Would you like to see it implemented in Canada? Leave a comment below and join the debate.
