FINRA Adopts Amendment to Rule That Would Provide Trusted Contact for Seniors with Diminished Capacities
Posted: June 6th, 2017
In March 2017, FINRA amended FINRA Rule 4512 to require member firms to make reasonable efforts to obtain the name and contact information for a trusted contact person upon the opening of a customer’s account.
The proposal to amend the rule was initially pitched in late October 2016 and has gone through the comment phase up until FINRA adopted and the SEC approved it.
The rule defines a “trusted contact person” as an individual, 18 or older, who the customer authorized the firm to contact and disclose information about the customer’s account, contact information, health status, or the identity of any legal guardian, executor, trustee or holder of a power of attorney, or as otherwise permitted by FINRA Rule 2165.
Further, the firm is required to disclose in writing that it is authorized to contact the trusted contact person and disclose information about the client’s account.
The amendment to Rule 4512 does not make the name and contact information of a trusted person a requirement, but only that the member firm make reasonable efforts to obtain the requisite information for the trusted contact person.
Additionally, the rule is not retroactive; member firms are only required to attempt to obtain the information for a trusted contact person when they update an account’s profile for accounts in existence prior to effective date of the amendment.
The new rule will allow seniors with diminished capacities to identify a trusted confidante who can be notified of any pressing matters concerning the senior’s accounts. The rule will be implemented in February 2018, at which point all brokers and brokerage firms must be in compliance.
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