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    IOSCO Suggests Sound Practices to Protect Senior Investors from Fraud

    March 12, 2018

    The IOSCO Board published report that examines the growing vulnerability of aging investors to financial fraud and other risks. The report explores the views and experiences of IOSCO members with regard to senior investor vulnerability. It provides a list and description of sound practices for regulators and financial services providers in this area and concludes with recommended next steps.

    The report on senior investor vulnerability reveals that seniors are at a higher risk, than other investors, of losing money to fraud or of being misled by others. It also indicates that the biggest risks to senior investors are unsuitable investments, financial fraud, and their diminished cognitive capability, which affects their financial decision-making. Research indicates that age-induced cognitive decline is linked to impaired financial decision-making. Some research also correlates aging with increased susceptibility to financial exploitation and fraud. These vulnerabilities are growing just as many investors assume greater responsibility for their retirement and financial future. The report offers sound practices for financial services providers, which include offering support to senior investors experiencing a life event during the product lifecycle and providing training and support for employees of financial services firms. Additionally, the sound practices for regulators include the following:

    • Deliver educational programs and resources targeting senior investors
    • Foster the development of senior-focused expertise within existing regulatory, educational, or advisory programs
    • Conduct research projects to better understand the risks and issues facing senior investors and the incidence and mechanics of investment fraud that affect seniors in their jurisdictions
    • Develop guidelines and training programs for personnel reviewing transactions conducted with senior investors

    The C8 Senior Investor Vulnerability working group will conduct an analysis of the impact of this report after one year to determine if any jurisdiction has changed or is planning to change its approach to protecting seniors from inappropriate and fraudulent investments. The working group is also considering creating an online toolkit, or other resources, to help jurisdictions take action based on the report.

     

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    Keywords: International, Securities, Vulnerability of Aging Investors, Senior Investors, Sound Practices, IOSCO

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