Help — and a shield against liability — may be on the way for advisers plagued with the dilemma of whether or not to report suspected elder abuse to authorities at the risk of breaching clients' privacy.

The House of Representatives passed a bill on Tuesday aimed at protecting elderly investors, and industry trade groups moved swiftly to urge the Senate to "quickly follow suit."

The Senior Safe Act would extend civil and administrative liability protection to advisers, broker-dealers and other financial professionals who report suspected abuse to a so-called covered agency, a designation that includes Adult Protective Services, law enforcement authorities and state and federal regulators.

Under the bill, compliance officers and other firm supervisors would be shielded from liability on the condition that those individuals have received training on how to spot signs of elder abuse.

FSI CEO Dale Brown hailed the legislation as "a big step forward in the prevention of elder financial abuse across the country."

(Bloomberg News)
(Bloomberg News)

"By providing civil and administrative immunity to financial services firms and advisers, the legislation would allow financial professionals to report potential abuse to government organizations, without violating privacy laws," Brown says in a statement.

The Insured Retirement Institute offered a similar assessment, calling for Senate consideration of a bill that it says will "help foster better communication between financial professionals, who are often the first to detect an issue, with Adult Protective Services and regulatory agencies."

Cathy Weatherford, IRI's CEO, notes that millions of baby boomers are retiring, and "this will only necessitate more concerted efforts to protect the nation's most vulnerable."


The legislation is a companion bill to the Senate version, authored by Susan Collins (R-Maine), which is awaiting consideration by the Senate Banking Committee.

Carolyn McClanahan, director of financial planning at Life Planning Partners, calls the bill a "step in the right direction," but notes that she has some reservations about the reporting measures in the legislation.

Specifically, she notes the provision that the shield from liability under privacy laws applies only to situations in which advisers report abuse to covered agencies, when often the most effective route to curbing financial exploitation can be to alert the victim's family.

"Often, fraud occurs through people outside the family, and all it takes to stop it is to have the family step in," McClanahan says. "Reporting to these agencies can open up a hornet's nest for the family. Although I am happy for government oversight, a requirement to involve the government may have unintended consequences. Time will tell."

A handful of states – Alabama, Indiana and Vermont – have recently enacted laws that would go a step farther and actually require advisers to report suspected abuse, rather than just providing legal cover in the event they opted to do so.

"States are starting to move in this direction," McClanahan says, though she cautions that she has concerns "about the unintended consequences of required reporting, also."