Submitted by nsscadmin on
Earlier this year the Canadian Securities Administrators and its members announced amendments to securities laws to enhance protection of older and vulnerable clients. These enhancements include obtaining the name and contact information of a trusted contact person (TCP) and giving registrants the ability to place a temporary hold on a transaction under certain circumstances. These enhancements come into effect on December 31, 2021, and clients may be contacted by their adviser regarding the changes.
Last week we took a closer look at the TCP provision. In this post we’ll continue our look into the protective enhancements by looking at temporary holds.
Under the new amendments, registrants may place a temporary hold on a transaction if they believe the client is being financially exploited or if they appear to lack the mental capacity to make financial decisions. Upon placing a temporary hold, action must be taken to determine the next course of action, possibly with the assistance of a TCP if one has been appointed.
A temporary hold does not apply to the client’s entire account, only to the suspect transaction. Transactions that are unrelated to suspected financial exploitation or an apparent lack of mental capacity should not be held. For example, if a temporary hold were placed on a sale of securities, automated bill payments from the client’s account would not be suspended or held.
So, how does the ability to place a temporary hold help investors?
As the population of Canada, and specifically Nova Scotia, gets older, instances of older and vulnerable people being exploited financially are on the rise. A financial adviser may have had a long relationship with an older client and may be able to spot signs of financial exploitation or abuse, or possibly spot reduced capacity in a client. The addition of a TCP to a client’s account gives a registrant a resource to take these concerns to and by allowing temporary holds regulators are providing registrants with a new layer of protection for older and vulnerable clients. The guidance provided by securities regulators to registrants gives them clear and consistent guidelines and recommendations when working with clients.
For more information on the placing of temporary holds please see the amendments to NI 31-103.