LEGISLATION
Senior Safe Act explained
On May 24, 2018, President Trump signed into law the Economic Growth, Regulatory Relief
and Consumer Protection Act, which included the legislative language of the Senior Safe Act.
The Senior Safe Act exempts financial institutions and some of their employees from liability
in any civil or administrative proceeding in situations where those employees report the
potential exploitation of a senior citizen to a government agency.
The exemption from liability is conditioned on the institution having provided training to
its employees and is subject to the report of potential exploitation being made in good faith.
The law allows insurance and financial advisors to report suspected cases of financial fraud
involving senior clients to financial institutions, which could then pass the suspicions along to
the authorities.
Under the act, advisors have a mechanism to report suspected fraud to their companies
or broker dealers, which can then investigate the matter and involve regulators or law
enforcement if needed.
Passage of this
act was a win for
consumers and
financial advisors
alike.
Mike Hedge is Director-Government
Relations at NAIFA. For more
information, contact Michael Hedge
at [email protected]
Role in the Senior Safe Act
NAIFA became involved in the Senior Safe Act when it was first introduced in the 114th
Congress and continued working with bill sponsors throughout the 115th Congress. During
this legislative process, NAIFA was active in ensuring the inclusion of insurance in the liability
protections that the bill provides, including needed protections for advisors’ senior clients,
while ensuring that it shields advisors acting in good faith from liability and other potential
consequences.
The Senior Safe Act does not mandate any action by financial institutions and regulators.
However, for financial institutions and certain eligible employees, affiliated persons, and
associated persons who satisfy its requirements, the Senior Safe Act provides immunity from
liability in any civil or administrative proceeding for reporting potential exploitation of a senior
citizen. As an example, this immunity can be helpful when a firm wants to report potential
exploitation but fears that the report could violate a privacy requirement.
The Senior Safe Act protects “covered financial institutions,” which include investment
advisers, broker-dealers, and transfer agents — and their eligible employees, from liability
in any civil or administrative proceeding in instances where those employees make a report
about the potential exploitation of a senior citizen (defined as not younger than 65 years)
to a covered agency.
The immunity established by the Senior Safe Act is provided on the condition that:
1 certain employees receive training on how to identify and report exploitative activity
against seniors before making a report, and
2 reports of suspected exploitation are made “in good faith” and “with reasonable care.” This
immunity applies to eligible employees and firms, but the requirements differ slightly.
Senior Safe Act continued on page 34
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Perspectives
Q1 2020