The association offers best practice to help protect older and vulnerable clients
Protecting seniors from financial exploitation is the focus of new guidance issued by the Mutual Fund Dealers Association of Canada (MFDA).
Among the households serviced by the association’s members, 21% are clients aged 65 or older and this cohort accounts for 34% of assets under administration.
And recent data from Statistics Canada highlighted the rising share of seniors in the Canadian population.
The new guidance follows MFDA staff observations of the use of two key measures used by members to protect older clients: naming a trusted contact person (TCP); and placing a temporary hold on transactions.
The guidance suggest that where members decide to use a TCP policy, they should ask for the contact’s details when opening a new account and ensure it is updated periodically, for example during a KYC update.
It advises that the use of a TCP should not be considered an alternative to a Power of Attorney; the trusted contact would not have any power to make changes to the client’s account or financial dealings but could be contacted where a member has concerns about financial exploitation of their client or their client’s mental capacity.
Additionally, the TCP should generally not be someone who has an interest in the client’s account or has Power of Attorney, but the guidance acknowledges that this may not always be possible.
In circumstances where the member decides to contact the TCP, they should also consider whether they should also contact other parties such as the MFDA, police, etc.
The second part of the new guidance focuses on circumstances when MFDA members might decide to place a temporary hold on transactions due to concerns over possible financial exploitation or mental capacity.
In these cases, the MFDA member rules on standard of conduct should be considered to ensure that clients are dealt with fairly, honestly, and in good faith.
The decision to implement a temporary hold should be made by “authorized and qualified supervisory and compliance staff” and there should be policies in place to ensure the correct people make the decisions.
Clients or their TCP and others authorized to transact on the account should also be contacted as soon as possible.
MFDA will be leading discussion on the use of TCP and temporary holds at the 2019 Seniors Summit on Wednesday October 30 and is also engaging with the CSA on developing a flexible and responsive regulatory approach to financial exploitation and diminished mental capacity among seniors and vulnerable clients.