Senator Asks Veterans Agency to Review How Financial Advisers Are Accredited

Senator Claire McCaskill of Missouri is asking the Department of Veteran Affairs to examine its process for accrediting thousands of financial advisers in the face of concerns over abuses of veterans’ benefits.

In a letter to Eric K. Shinseki, the secretary of veterans affairs, Ms. McCaskill, a Democrat who leads the Senate subcommittee on Financial and Contracting Oversight, wrote, “The V.A. may not be adequately managing and overseeing the accreditation process” of advisers.

Through a lax accreditation process, Ms. McCaskill said, the agency is effectively “providing unscrupulous or unqualified individuals with the opportunity to both abuse taxpayer dollars and directly harm our nation’s veterans.”

Across the country, as the vast baby boom generation retires, a cottage industry has sprung up around the Veterans Pension program. Under the V.A. program, war veterans who have low incomes or are disabled or over 65, can be eligible for as much as $20,000 a year. With retirement savings reduced by the financial crisis, a growing number of veterans have clamored for the benefit, seeking money to help cover the cost of assisted living or nursing homes.

As demand soars, the V.A.’s accreditation process, which allows advisers to prepare benefit applications for veterans, has become increasingly important to weed out unfit advisers, state and federal authorities said. But the process is so loose that prospective advisers are allowed to provide their own background information, including any criminal records.

Although the department accredits more than 20,000 advisers and gets more than 5,000 new applicants annually, the agency only has four full-time employees to review those applications, Ms. McCaskill said in her letter.

Once advisers secure the coveted accreditation, they rarely lose it, even if they are dogged by customer complaints or if their records are tarnished by regulatory actions. The V.A. has revoked the credentials of only two advisers.

Some accredited advisers sell financial products like annuities and trusts that are meant to mask veterans’ assets or income â€" arrangements that can entangle a veteran’s money for years or even decades. Others circumvent V.A. rules and charge hundreds or even thousands of dollars for advice that veterans can receive free.

The growing abuses surrounding the veterans’ benefit and the perils of the accreditation process were detailed in a front-page article in The New York Times last month.

In her letter, Ms. McCaskill referred to the article, emphasizing that it had been jarring to learn of “fraud and negligent representation of veterans by individuals who have received accreditation from the Department of Veterans Affairs.”

In a statement on Wednesday, a V.A. spokesman said the agency, which plans to respond to Ms. McCaskill’s letter, “is committed to providing veterans and their survivors with the benefits they have earned and deserve.”

In December, a V.A. spokesman said that the agency planned to perform more thorough background checks “as necessary.” The spokesman also said, “we realize there are some areas in the program that we could improve to ensure that individuals who obtain and maintain V.A. accreditation are qualified.”