Financial services companies must walk a fine line

By Susan Yellin | September 11 2015 09:02AM

Banks and insurance companies, like other parts of the financial services industry, have been working with seniors for years, but nevertheless find dealing with those with dementia a difficult situation, they say.

Banks typically rely on legal or medical documents declaring that someone is not able to manage their own affairs and has appointed someone else to do so, such as a power of attorney or the public guardian and trustee, says Maura Drew-Lytle, director of Media Relations and Communications with the Canadian Bankers Association.

A bank concerned about unusual banking activity will first try to speak with customers to determine if they know what they are doing and the implications, says Drew-Lytle.

If the customer is trying to withdraw all the money in their RRSP, for example, someone from the bank will try to discuss it with the customer. If the explanation doesn’t seem reasonable, the bank may ask if there is some other trusted person, such as a designated lawyer, family member or financial advisor who they can call to help out.

To protect itself, the bank might refuse to complete the transaction until it is more comfortable that the implications of the transaction were completely understood by the customer.

“At all times, banks must walk a fine line between doing their best to help customers protect themselves from abuse and their obligation to follow clients’ instructions and abide by privacy laws,” says Drew-Lytle.

Under the Digital Privacy Act (which updates the Personal Information Protection and Electronic Documents Act) if a person seems to be in a financial abuse situation and doesn’t appear to understand or be able to help him or herself, banks can now reach out to police, the public guardian and trustee or other government agencies, next of kin not involved in the potential abuse, and other authorized representatives, to seek help with the situation.

Insurance companies, as well, are aware of the sensitivity involved in such issues, says Vic Kazazian, president, Sun Life Financial Distributors (Canada).

“Advisors must use their judgment and Sun Life has given advisors guidance about these sensitive situations,” Kazazian said in an email. “As reasonable persons, advisors do their very best to determine why a client wants to do something that is out of character or not following their financial plan.

“If an advisor is concerned the client is not acting in their own best interests, there are any number of steps they can take to help the client. It really depends on each situation which can all be very different.”