The Senior Safe Act: “Immunity” with Conditions

On May 23, 2019, the SEC, NASAA, and FINRA published a year-end review of the Senior Safe Act which became federal law one year ago. In doing so, they also issued a Fact Sheet to help raise awareness with financial institutions and describe how the Act’s immunity provisions work.

What is the Senior Safe Act?

As the FINRA release states, “the Senior Safe Act was included as Section 303 of the Economic Growth, Regulatory Relief, and Consumer Protection Act, which was signed into law on May 24, 2018. The Act addresses barriers financial professionals face in reporting suspected senior financial exploitation or abuse to authorities.” These barriers were the conflicts between reporting suspected activity versus privacy of client information rules. Because of this potential conflict, this federal law provided a carve out to provide protection to Registered Persons and the Financial Institution when reporting potential elder abuse.

The Senior Safe Act protects “covered financial institutions” and their eligible employees from liability in any civil or administrative proceeding when they make a report on potential senior exploitation (65 years and older) to a covered agency. The term “covered agency” includes:

  • a state financial regulatory authority (including a state securities regulator or law enforcement authority and a state insurance regulator);
  • a state or local adult protective services agency;
  • the SEC;
  • an SEC-registered national securities association (e.g., FINRA);
  • a federal law enforcement agency;
  • or any Federal agency represented in the membership of the Financial Institutions Examination Council.

Note that this act applies only to disclosures made to a “covered agency”, not a third party.

Who Actually Receives Immunity?

In order to receive immunity, all reports of suspected exploitation must be made “in good faith” and “with reasonable care.” The law breaks this immunity into two categories: the employees and the financial institutions.

For employees, individual immunity can be given to cover supervisors, compliance, legal, BSA officers, registered representatives, investment adviser representatives, and insurance producers affiliated with the covered financial institution. In general, employees are not required to be trained. However, to qualify for immunity, senior-specific training must be provided. The act provides training requirements that must be met in order to gain immunity. These requirements include how to identify, report, and understand privacy, as well as job-specific training considerations. Training must be completed as soon as “reasonably practical” or one year from hire date for new hires. Documentation must be maintained and available for inspection.

For financial institutions, institutional immunity is given when an eligible employee makes the appropriate disclosure and all employees have received the required training to qualify for immunity.

To learn more about the Senior Safe Act, check out FINRA’s News Release and the Senior Safe Act Fact Sheet.

To explore other blog posts related to protecting senior investors, please click here.

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