Opinion: Pass this bill that would allow mutual funds to delay withdrawals if they suspect financial abuse

Financial abuse is a significant, and potentially devastating, problem across the country, especially for the elderly and other vulnerable adults who are common targets of con artists and cheaters.

These criminals prey on the lonely and isolated elderly to gain their trust and affection, then often make an urgent request for money for reasons ranging from a personal emergency or a last minute plane ticket to expenses. medical or gambling debt. An estimated 7.86 million cases of elder fraud occur each year in the United States, resulting in losses of $ 148 billion for this vulnerable population. every year.

Although financial companies may identify some withdrawal requests as unusual, there is currently no law allowing them to stop such transactions. But legislation is now being passed by Congress to allow the companies behind mutual funds and exchange-traded funds – where many seniors save and invest their money – to better protect vulnerable Americans.

A bill called the Prevention of Financial Abuse Act would allow fund companies to delay transactions that are reasonably believed to be the result of financial abuse for up to 15 business days. This would allow time to confirm the validity of the transaction, verify the client’s contact details, or identify legal guardians, executors or trustees.

The ability to suspend a transaction is especially important because a key element of these scams is the pressure exerted by criminals on the victims to withdraw money urgently. Under the Prevention of Financial Abuse Act, fund companies can suspend the transaction to verify its validity before the money is stolen. Once the money is gone, it is likely taken away from the elderly person forever and could potentially leave them unable to pay their bills or pay for their basic expenses.

The legislation would also cover anyone 18 years of age or older who is unable to protect their own interests.

In addition to allowing companies to delay suspicious transactions, the bill requires the Securities and Exchange Commission to report to Congress with recommendations for legislative and regulatory reforms to combat financial abuse of the elderly and other vulnerable adults. Elder abuse is a grossly underreported crime. Improved SEC reporting would likely lead to more information and data on these crimes, which could help identify additional safeguards to protect those at risk. These efforts could also identify ways to help educate potential victims as well as their families or caregivers to help prevent future thefts.

The House of Representatives approved the Financial Abuse Prevention Act, which was introduced by Representative Ann Wagner (R-Mo.), A senior member of the powerful House Financial Services Committee, unanimously in October. While the Senate has yet to consider it, the bill passed by the House with strong bipartisan support is a positive sign and should serve as a catalyst for action in the Senate.

The Investment Company Institute and its members are committed to combating financial abuse and exploitation. We are constantly working to ensure that the fund industry uses the most sophisticated security measures and guarantees available and continually seek new ways to protect individual investors. That is why ICI strongly supports the Financial Abuse Prevention Law and calls on the Senate to pass it immediately.

Eric J. Pan is President and CEO of the Investment Company Institute, the world’s leading trade association for mutual funds and other regulated funds.

Source link

Comments are closed.