National Association of Insurance and Financial Advisors

NASAA Model on Senior Financial Fraud Would Make Reporting Mandatory

The North American Securities Administrators Association (NASAA), the trade group representing the state securities regulators, has approved model legislation that requires financial advisors and firms to report suspected financial exploitation of seniors to states' securities commissioners and adult protective services offices.

The model is designed to address the increasing problem of financial exploitation of seniors.

"While NAIFA appreciates the intent of the NASAA model law to protect seniors, particularly those most vulnerable," said NAIFA President Jules Gaudreau, "we oppose the mandatory reporting requirement. Such a requirement may result in excess reporting of financial transactions or disbursements, many of which may not be connected with financial exploitation, and it could also open up advisors to more liability for not detecting and reporting financial exploitation."

NAIFA had previously suggested changes to the model.
Instead of the NASAA approach, NAIFA developed its own model legislation on this issue that calls for a voluntary reporting process where advisors may report possible financial abuse of a senior client to their firms. The firms can then carefully review each matter and determine whether to report to state authorities. The NAIFA model also would protect advisors and their firms from liability for reporting suspected financial exploitation of a senior. 
It is possible that some states may consider the NASAA proposal this year, but many are likely to consider it in 2017. NAIFA-National sent its model law to the NAIFA state associations, which may wish to use that model as a legislative alternative to the NASAA proposal.  
  • Posted February 3, 2016 IN

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