What the Dodd-Frank Wall Street Reform and Consumer Protection Act Means for Seniors

On July 21, 2010, the President signed into law the Dodd-Frank Wall Street Reform and Consumer Protection Act [Consumer Protection Act].  This new legislation will better protect seniors and others whose financial livelihoods have been jeopardized by predatory practices and a lack of transparency in the banking and securities industries. Over the last three years, older Americans in particular have lost billions of hard-earned dollars due to the failure of an outdated and compromised financial regulatory system. According to recent studies from MetLife Mature Market Institute and the Investor Protection Trust, one in every five people age 65 or older has been a victim of a money-related crime or other suspect financial practices. The Consumer Protection Act will aid seniors primarily through the creation of a Consumer Financial Protection Bureau and enhanced protections for investors in securities products.

Creation of the Consumer Financial Protection Bureau

The Consumer Protection Act establishes a new bureau solely dedicated to the protection of consumers from predatory practices and other abuses in the lending industry.  Prior to this, the responsibility to do so was spread among seven different federal agencies with many other responsibilities. As a result, consumer protection was not a primary focus and was largely ignored. This new, independent Bureau has both rulemaking and enforcement authority that will help to better protect seniors from predatory lending, banking and securities practices that have led to many elderly consumers losing their homes. For example, the law gives the Bureau authority to regulate and establish minimum standards to protect consumers obtaining reverse mortgages, which are increasing in popularity with seniors who have equity in their homes and want to supplement their income. Moreover, it establishes an Office of Financial Literacy to enhance consumer knowledge of financial products.

Enhanced protections for investors in securities products

The Consumer Protection Act also provides additional resources to the Securities and Exchange Commission (SEC) to protect investors, and it strengthens the fiduciary responsibilities of securities and financial industry professionals . The legislation establishes the Office of Investor Advocate within the SEC to act as ombudsman, helping investors address problems they encounter in their dealings with the SEC, and as advocate, identifying the most significant problem areas investors encounter with securities industry practitioners and products. Furthermore, the legislation would mandate that those in the financial and securities industry who hold themselves out as specialists in the sale of investment products to seniors are identifiable and actually possess the necessary qualifications.

Government Relations and Policy, July 2010