Last month, we informed you about new tools coming at the end of December designed to help address issues of diminished mental capacity and financial exploitation of older and vulnerable investors.
This includes the ability for your advisor to contact someone you’ve designated as your “trusted contact person” or place a temporary hold on your account if your advisor reasonably believes you may have become vulnerable or are being financially exploited.
Remember though, this is optional – an advisor is not required to use these tools. Advisors may hesitate to use them because of concerns about being sued by their client or a client’s family member since the rules do not come with a “legal safe harbour” to protect them from such lawsuits.
To help make sure these new tools make a real difference for investors, financial firms need to develop clear policies and training for advisors on how and when to use them, including training and policies on:
---- How to recognize signs that a client may have -----
---- diminished mental capacity or may be a victim of ------ ----financial abuse.
---- How to escalate issues involving a potentially ------------- vulnerable client.
Evidence suggests that firms in Canada have a long way to go in adopting such policies. The most recent study by a Canadian securities regulator on this issue found that about 90% of firms reviewed in 2018 did not have such policies in place.