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Serving Senior Investors: #4 - Escalating Issues and Taking Next Steps
September 1, 2010
Next
up in "Protecting
Senior Investors: Compliance, Supervisory and Other Practices Used by
Financial Services Firms in Serving Senior Investors," guidelines from the staffs of SEC's OCIE, FINRA and
NASAA, is establishing an internal process for escalating issues and taking next steps.
Recently, firms have created and adopted policies, including the following:
- Identifying a central point of contact within Compliance to provide guidance on senior investor issues.
- Creating a mailbox for all senior investor related questions for follow-up.
- Escalating any suspected elder abuse to branch management, then to divisional counsel, and possible reporting to state authorities.
- Potentially declining a transaction or declining to open an account if there's suspicion of financial abuse or diminished capacity.
In 2008, firms noted these examples of escalation procedures:
- Requiring documentation of any suspected diminished capacity or elder financial abuse, followed by immediate escalation.
- Designating an individual or individuals to whom escalated matters should be directed - e.g., a BOM, Compliance or Legal officer, a specially-created senior task force within the firm.
- Embedding escalation procedures in employee training and CEP sessions.
"Next step" policies in 2008 included the following:
- Prohibiting securities recommendations or investments in an account while concerns persist.
- Communicating with an investor’s designated emergency contact or person with a POA for the investor.
- Conducting a review of the investor’s account and identifying any transactions or patterns that could indicate a problem - i.e., financial abuse by a securities professional or other individual.
- Maintaining frequent contact with the investor to assess any new developments.
- Having a manager or designated individual communicate with the investor, along with his/her RR.
- Notifying Legal and Compliance of further conversations with the investor, and involving them as appropriate.
- Consulting appropriate state statutes, which may include alerting appropriate authorities, including a government protective services organization, if elder abuse is suspected.
- Documenting in the investor’s file whenever there's contact with Legal or Compliance.
For further details, click onto: [ SEC PR 10-147, 8/13 ]; and, [ The 2010 Addendum ]; and [ The 2008 Report ]
*******************************************************************************
FYI: Course Outline. Up Next: #5 - Encouraging investors of all ages to prepare for the future...
- Getting started: how firms are thinking of ways to remodel their supervisory and compliance structures to meet the changing needs of senior investors.
- Communicating effectively with senior investors.
- Training and educating firm employees on senior-specific issues (such as how to identify signs of diminished capacity and elder abuse).
- Establishing an internal process for escalating issues and taking next steps.
- Encouraging investors of all ages to prepare for the future.
- Advertising and marketing to senior investors.
- Obtaining information at account opening.
- Ensuring the appropriateness of investments; and,
- Conducting senior-focused supervision, surveillance and compliance reviews.
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