Concerns such as this have become top of mind for the securities sector, with older adults, advocates, financial firms and regulators in agreement that something needs to change. In response, the Canadian Foundation for the Advancement of Investor Rights (FAIR Canada) and the Canadian Centre for Elder Law (CCEL) undertook a one-year project to understand the key concerns from stakeholders, look at international laws and best practices and make recommendations.
On November 16, FAIR Canada and the CCEL released their report aimed at helping the investment firms in these situations, while at the same time helping protect vulnerable adults who are at risk of elder financial abuse, financial exploitation, undue influence and diminished mental capacity.
“In this report we are calling on securities regulators, and in the investment industry to really engage on these issues. There is broad consensus amongst seniors, advocates and the investment industry that there needs to be protocols in place which balance an investors’ right to make their own choices, with the reality that the investment firms are in a unique place to prevent or stop financial exploitation of vulnerable investors”, says Marian Passmore, COO and Director of Policy at FAIR Canada, and a co-author of the report.
“These recommendations also help the investment industry as they try to play a role in abuse prevention. This report offers some key practical solutions, which includes recommending a ‘Legal Safe Harbour’ for reporting concerns”, says Laura Tamblyn Watts, Senior Fellow and Staff Lawyer at the CCEL. “However, the securities regulators need to create a clear ‘Conduct Protocol’ so investment firms know what to do and how to do it, in order to qualify from the legal exemption.”
The report makes 6 recommendations to Canadian Securities Regulators:
- Require investment firms to make reasonable efforts to obtain the name and contact information of a Trusted Contact Person for each client, who can be contacted in case of suspicion of abuse or diminished mental capacity, so long as they themselves are not suspected of financial abuse or exploitation of the client.
- Allow authorized individuals within an investment firm to place a Temporary Hold on Trades and Disbursements of funds or securities when there is a reasonable suspicion of financial abuse – that has occurred, is occurring or will be attempted – or where the client has lost the capacity to provide instructions.
- Provide a Legal Safe Harbour for investment firms and financial service providers who reach out to appropriately report suspicions of financial abuse or mental incapacity.
- Create a Conduct Protocol that defines key terms and sets out the steps firms and financial services representatives should take to identify and protect vulnerable clients. This Conduct Protocol will require that investment firms mandatorily report suspected financial abuse of vulnerable investors to the appropriate securities regulator.
- Mandate Specific Education and Training for all investment firms in the areas of elder abuse, undue influence, mental capacity issues, enduring powers of attorney and ageism and have the required proficiencies.
- Require that Investment Firms Become Familiar with Outside Resources and Responders and learn how and when to appropriately refer a case of suspected elder financial abuse, undue influence or diminished mental capacity to local responders.
Full Article & Source:
Report On Vulnerable Investors: Elder Abuse, Financial Exploitation, Undue Influence And Diminished Mental Capacity