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The Ontario Securities Commission plans to introduce guidance and educational initiatives for firms and advisers who work with older investors.

Fred Lum

Ontario regulators are working to implement a new action plan designed to better protect seniors when it comes to investment matters.

The Ontario Securities Commission (OSC) released a report on Tuesday titled Seniors Strategy, which outlines initiatives aimed at helping registered firms and their financial advisers address issues that may arise as their clients age. The OSC noted that seniors – people 65 or older – are expected to comprise a quarter of Ontario's population by 2041. For many people, aging can be accompanied by health, mobility or cognitive changes that may affect their ability to make sound judgments – rendering them more susceptible to financial exploitation and fraud.

Over the coming year, the OSC will implement a new regulatory framework for addressing exploitation and cognitive impairment among older investors. For example, an adviser could be obligated to make a reasonable effort to obtain the name and information of a client's "trusted contact person" if there is any concern about the client's behaviour or questionable transactions in his or her accounts.

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Among other things, the strategy would allow the adviser to place a temporary hold on disbursements from the client's account or make a disclosure to the trusted contact person if they believe there has been financial exploitation or fraud or if they believe the client's judgment may be impaired. The adviser and the investment firm would be provided a "safe harbour" when placing such a hold on the client's account.

"The financial lives of individuals aged 65 and older are becoming more complex, with incomes coming from more potentially volatile sources, higher debt levels and a greater share of their assets in less liquid assets, such as real estate, than was the case 20 years ago," the OSC said in an executive summary. "These trends indicate that Ontarians will be called upon to make complex financial judgments later in life, and with higher stakes, than may have been the case for previous generations."

The OSC plans to introduce guidance and educational initiatives for firms and advisers who work with older investors, covering topics such as best practices for engaging and communicating with such clients. Additionally, the regulator intends to dedicate staff in its contact centre to field questions and concerns from older investors.

"Because people are living longer, interest rates are at historic lows and workplace pensions are disappearing, protecting the investments of older Canadians has never been more important," said Wanda Morris, vice-president of advocacy at CARP, an investor association for older Canadians. "The OSC's new seniors strategy and action plan is a critical first step in addressing the unique risks associated with older investors."

Industry players praised the OSC plans.

"We view the seniors strategy as a crucial road map and conversation starter on pressing issues around aging investors," said Katie Walmsley, president of the Portfolio Management Association of Canada. "This publication will help the investment industry work with aging investors and their families to better protect and preserve their retirement savings."

Michelle Alexander, vice-president of the Investment Industry Association of Canada, applauded the effort to address the challenges stemming from diminished mental capacity later in life. "The OSC's Seniors Strategy has the benefit of being both flexible and responsive to the changing needs of older individuals, allowing member firms to exercise judgment based on the particular situation, while keeping appropriate investor protection measures in place," she said in a statement.

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The Mutual Fund Dealers Association of Canada said it will also release guidance to mutual-fund dealers and advisers on best practices for better protecting and serving senior clients, which account for approximately 3.6 million households serviced by MFDA-licensed firms.

The OSC will provide an update on its progress in one year.

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