IOSCO to protect senior investors from financial fraud

IOSCO issues statement on liquidity risk management recommendations for investment funds

The Board of the International Organization of Securities Commissions (IOSCO) informed the public that it has published today a report that examines the growing vulnerability of ageing investors to financial fraud and other risks and identifies sound practices for enhancing their protection.

The report 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. Complex products, deficient financial literacy, and social isolation pose additional risks to senior investors.

Ageing populations are a challenge to investor protection, as ageing and associated levels of physical and cognitive decline increasingly debilitate the capabilities of investors worldwide. Research indicates that age-induced cognitive decline is linked to impaired financial decision-making. Some research also correlates ageing 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.

This report explores the views and experiences of IOSCO members regarding senior investor vulnerability. It provides a list and description of sound practices for both regulators and financial services providers and includes a non-exhaustive bibliography of literature that may be helpful to regulators and others.

Sound practices for regulators:

  1. Deliver educational programs and resources targeting senior investors.
  2. Foster the development of senior-focused expertise within existing regulatory, educational or advisory programs.
  3. 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.
  4. Develop guidelines and training programs for personnel reviewing transactions conducted with senior investors.

Sound practices for financial services providers:

  1. Offer support to senior investors experiencing a life event during the product lifecycle.
  2. Provide training and support for employees of financial services firms.

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