New Federal Agency Charged With Protecting Older Consumers of Financial Services

BY GENE MITCHELL

The Consumer Financial Protection Bureau (CFPB) was created by the Dodd-Frank Wall Street Reform and Consumer Protection Act of 2010. The CFPB includes the Office for Older Americans, which has a mandate to help protect the financial interests of consumers aged 62 and up.

Hubert H. (“Skip”) Humphrey III was named assistant director of the Office for Older Americans in October. Humphrey, a former attorney general of Minnesota, has also worked in the private sector in communication and public affairs, and has taught at the University of Minnesota. He has served as the president of the Minnesota AARP and has been an AARP national board member.

In December, LeadingAge interviewed Humphrey to learn more about the CFPB’s priorities in protecting the interests of older Americans.

LeadingAge: What is the mandate of the Consumer Financial Protection Bureau with respect to older Americans? How will seniors benefit from the Bureau’s work?

Skip Humphrey: We have to fit what our office does within the mission of CFPB: that markets that provide financial services and products are transparent, competitive, and that consumers have access to the information they need to make financial decisions. Within that [mission] there are a number of different populations we are asked by Congress to look at, one of which is Americans 62 and older. Our mission is to coordinate and work with state and federal agencies and community organizations to assist seniors in having the information they need to make sound financial decisions.

If we accomplish that, seniors can go into the marketplace with a degree of understanding and make sound financial decisions.

Beyond that, my own experience has taught me that you need the educational background for seniors to be well-informed, but also the enforcement capacity of the Bureau to keep rascals out of the marketplace.

LeadingAge: What issue areas, with respect to older Americans, are the greatest priorities for CFPB? What sorts of reforms would you like to see going forward?

Skip Humphrey: I’ll give one example and it raises issues your [members] have to confront. That is the issue of diminished capacity in the decision-making process, and the risk older Americans face, where they may not have the same level of capacity as someone who is younger. Those people may well be in some of the facilities of readers of yours. How will we help those who are caregivers have the right tools as they assist in making decisions?

Elder abuse and financial exploitation is a real problem and I’ve heard about it all over this country. It’s also the financial institutions that are sensitive to this. Take a bank—a teller may see signs of a problem. Why is this person taking out a lot of money when they never have before? At that point someone needs to get some help. That’s where we have a major area of concern. There are issues regarding guardianship, and some of the folks in your group are concerned about that relationship: What is [the guardian’s] training, what is their background?

LeadingAge: What strategies will you use for getting the word out about the work CFBP is doing?

Skip Humphrey: There are a number of ways. We have a very good website [www.consumerfinance.gov] and will be expanding it. Secondly, we’re doing a lot of media interviews. Third, we are meeting with organizations all around the country. I just came back from Portland, Maine, where we met with a whole host of organizations and law-enforcement agencies that are becoming more sensitive to the problems out there.

LeadingAge: Do you have any observations about how well aging-services providers do in terms of helping consumers make informed choices about care options?

Skip Humphrey: I don’t want to prejudge, but you’ve hit on what Congress has asked us to look at. They’ve asked us to coordinate research, learn about best practices and training, etc. We’re just beginning that kind of effort.

Organizations like yours have to help me understand financial transactions. In many of these transactions, the market is shifting to the home care industry. We’re not necessarily going to be looking at the quality of that care, but will look at the financial end of things.

But I want to put this back into the framework of the larger picture: How can we help seniors have the financial information they need, and gain confidence they can go into a very robust marketplace and make these decisions as they age? It’s hard enough for a 50-year-old.

LeadingAge: Our members are highly regulated, especially those providing skilled nursing care. To what degree will CFPB work with providers to achieve consumer protection goals?

Skip Humphrey: We’re working not only with non-profits but for-profits. Let’s not duplicate what’s already been done and done well. We’re now gathering information and finding databases. A lot of work has already been done in various places around the country. I’ve had some strong support from local agencies and organizations who want some help.

Some states have been very active in these areas, [for instance] Texas and California; I was quite impressed with what I saw in Maine, but for the most part it’s kind of anecdotal at this point.

This is the first federal office solely focused on financial information and education for seniors. It’s a big task but an exciting opportunity to really help the growing number of older Americans.

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I'm going to have to notify this gentleman of Devon Bank and the things that I'm hearing at the election functions.  Banks are forcing elders into buying annuities, harrassing children's parents and calling them all the time.  So, now we not only have trust officers that aren't trustworthy but the entire financial industry preying on the elderly and yet, this gentleman trusts them?  I'll have to get the word out.

Ex-Partner of Big Law Firm Convicted of Taking $370,000

A Wisconsin jury has found a former partner of a large international law firm guilty of stealing $370,000 from an elderly client who prosecutors said suffered from dementia.

Dorothy Phinney, now 94, became a client of Milwaukee lawyer Jeffrey Elverman in 2000, when he was a partner at the firm of Quarles & Brady. In 2003 and 2004, Phinney signed checks to Elverman, who held her power of attorney, totaling $370,000. The payments came to light in 2008, shortly after a Milwaukee County judge found Phinney incompetent and appointed a community services agency as her guardian. The guardian has also filed a pending civil suit alleging Elverman took more than $600,000 from Phinney.

At trial, prosecutors presented a caregiver's records showing that Elverman met with Phinney for about an hour a week, on average. To justify $370,000 in fees, Elverman would have had to work 30 hours a week for Phinney at his $150 hourly rate, an assistant district attorney told the Milwaukee County jury.

But Elverman's lawyer countered that although Phinney couldn't name the president or identify a stapler, she understood her own finances well enough to know she wanted Elverman to help her handle them and she intended to pay him the money.

"This case is about Dorothy Phinney's ability to consent," attorney Daniel Drigot told the jury in his opening statement. "It's not about whether she was too generous or Mr. Elverman was too greedy." Elverman did not testify at his trial.

Elverman left Quarles & Brady in 2004 for unrelated reasons. The firm's internal investigation following Elverman's departure raised concerns about his representation of Phinney, but Elverman refused to allow Quarles & Brady to contact Phinney.

Elverman faces up to five years in prison and a fine of up to $25,000.
 
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