FINRA Senior Protection Rules Kick In

Two new Financial Industry Regulatory Authority rules kicked in on Monday designed to curb the financial exploitation of seniors and vulnerable adults and set in motion national standards to protect senior investors.

Firms are now required to make “reasonable efforts” to obtain the name of and contact information for a trusted contact person for a customer’s account.

FINRA member firms also can now place a temporary hold on a disbursement of funds or securities when there is a reasonable belief of financial exploitation, and to notify 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,” said Robert Colby, FINRA’s Chief Legal Officer.

“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,” Colby said.

FINRA released in early January a set of frequently asked questions on its rules relating to financial exploitation of seniors. FINRA amended its New Account Application Template, a voluntary model brokerage account form that is provided as a resource to firms when they design or update their new account forms, to capture trusted contact person information.