More On Legal & Compliancefrom The Advisor's Professional Library
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Seven federal regulatory agencies, including the Securities and Exchange Commission, issued guidance Tuesday clarifying that the privacy provisions of the Gramm-Leach-Bliley Act generally permit financial institutions to report suspected elder financial abuse to appropriate authorities.
The law generally requires that a financial institution notify consumers and give them an opportunity to opt out before providing nonpublic personal information to a third party.
The guidance — issued by the Federal Reserve, Commodity Futures Trading Commission, Consumer Financial Protection Bureau, Federal Deposit Insurance Corp., Federal Trade Commission, National Credit Union Administration, Office of the Comptroller of the Currency and the SEC — clarifies that it is generally acceptable under the law for financial institutions to report suspected elder financial abuse to appropriate local, state or federal agencies.
CFPB Director Richard Cordray said in a statement that the central point of the guide is to clarify that "reporting suspected elder financial abuse to the appropriate authorities is typically the right thing to do and generally will not violate the Gramm-Leach-Bliley Act." The law, he continued, "establishes how and when a financial institution is allowed to disclose nonpublic personal information to third parties not affiliated with the institution."
Financial institutions have expressed concern that in many circumstances they may not disclose such information unless they have informed the consumer and provided an opportunity to opt out, Cordray explained. However, the guidance "makes clear that reporting suspected elder financial abuse generally is not subject to these same concerns."
“Older adults can be attractive targets for financial exploitation and may be taken advantage of by scam artists, financial advisors, family members, caregivers or home repair contractors,” the guide states.
The guide notes the recent studies that suggest that financial exploitation is the most common form of elder abuse and that only a small fraction of incidents is reported. Older adults often are targeted because for various reasons, the guide states: because they have retirement savings, accumulated home equity or other assets. They also are more likely to experience cognitive decline, which can impair their capacity to recognize financial exploitation and scams.
“Employees of financial institutions may be able to spot irregular transactions, account activity or behavior that signals financial abuse. They can play a key role in preventing and detecting elder financial exploitation by reporting suspicious activities to the proper authorities,” the guide states.
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