FINRA Senior Protection Rules Kick In

Two new Financial Industry Regulatory Authority (FINRA) rules designed to curb the financial abuse of seniors and vulnerable adults and enact national standards to protect senior investors went into effect on Feb. 5, reports Think Advisor . FINRA member firms must now make "reasonable efforts" to obtain the name of and contact information for a trusted contact person for a customer's account. In addition, firms can impose a temporary freeze on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and alert the trusted contact of the temporary hold. "These important changes, developed in collaboration with our members, provide firms with tools to respond more quickly and effectively to protect seniors and vulnerable investors from financial exploitation," says FINRA Chief Legal Officer Robert Colby. "With the aging of the U.S. population, financial exploitation is a serious and growing problem, and protecting senior investors remains a top priority for FINRA." The Consumer Federation of America's Barbara Roper says financial professionals "can play a crucial role in detecting and preventing exploitation of vulnerable seniors, and these rules can help by making brokers more confident of their ability to act without repercussions." She notes her organization prefers the North American Securities Administrators Association's model act, "which includes a requirement to report any misuse to regulators and other relevant officials."