New rules intended to protect seniors from financial fraud were proposed by the Financial Industry Regulatory Authority (FINRA).

The rules will allow financial companies to respond to situations where there is a reasonable belief of financial fraud occurring. If fully implemented, financial firms would be required to ask customers for a trusted contact and would be able to place a hold on the dispersal of funds for up to 15 business days.

The rules are being proposed for a few reasons. The regulator says that the experience with its Securities Helpline for Seniors (844-57-HELPS) has highlighted issues related to financial exploitation. Financial firms will receive a regulatory safe harbor they can cite as acting under if legal action by a customer is brought against them.

Only three states—Delaware, Missouri and Washington—have rules permitting financial institutions to place temporary holds on disbursements and transactions if financial exploitation is suspected.

The trusted contact is a person who will be a “resource for the firm in administering the customer’s account and in responding to possible financial exploitation.” This person must be at least age 18 and “not be authorized to transact business on behalf of the account.” Financial firms will be required to ask for the name and contact information of the trusted contact at the time an account is opened, the account information is being updated or “when there is a reason to believe that there has been a change” in a customer’s situation. You will not be required to list a trusted contact.

If there is a reasonable belief that financial exploitation is occurring, has been attempted or will be attempted, financial firms would be allowed to postpone dispersing funds for up to 15 business days. The trusted contact must be notified of the hold and reason for it within two business days. If the trusted contacted cannot be contacted or is believed to be the person engaging in the financial exploitation, an immediate family member should be contacted.

The full proposal can be read at www.finra.org/industry/notices/15-37. FINRA is seeking public comments through November 30, 2015; email them to pubcom@finra.org.

Source: “Financial Exploitation of Seniors and Other Vulnerable Adults,” FINRA Regulatory Notice 15-37.