Comments on Proposed Amendments to CFP Board's Disciplinary Rules and Procedures

On April 5, 2012, CFP Board announced that its Board of Directors approved amendments to CFP Board's Disciplinary Rules designed to clarify ambiguities, eliminate inconsistencies and strengthen, in particular, the interim suspension procedures of the Disciplinary Rules. The amendments, effective June 1, 2012, were adopted following thoughtful consideration of comments received during a 45-day public comment. Read more about the amendments to CFP Board's Disciplinary Rules >

The individuals and organizations listed below responded to CFP Board's request for comments by providing comments regarding the proposal between August 18 and October 3, 2011. The content of each comment is available for review below. CFP Board accepts no responsibility for the content of the comments.

Comments

• James A. Barnash, CFP®
• Dan Candura, CFP®
• Brian L. Dietz, CFP®
• Don Haisman, CFP®
• Clyde G. Hohenstein, CFP®
• James Knaus, CFP®
• Amy Jo Lauber, CFP®
• Dan Moisand, CFP®
• Tamara S. Monroe, Esq.
• Kendrick G. Smith, CFP®
• Troy Sumrall, CFP®
• Neal Van Zutphen, CFP®

Updated October 12, 2011

JAMES A. BARNASH, CFP®

Date: August 29, 2011

Having read and analyzed the proposed amendments to the Disciplinary Rules and Procedures I find them to be appropriate and reasonable. Many of the changes appear to be related to changing phrasing for a certificant who has been named in a proceeding, while the more direct changes are in the areas of interim suspensions and appeals of those interim suspensions. Based on the wording in the proposed changes I find them to be appropriate and reasonable.

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DAN CANDURA, CFP®

Date: September 15, 2011

I appreciate the opportunity to provide comment on the proposed changes to the disciplinary process and procedures. As a former member and chair of the Board of Professional Review as well as a member of CFP Board's Ethics Task Force, I have a keen interest in the intricacies of the disciplinary process.

I commend CFP Board for their effort to conduct periodic reviews of the disciplinary process. It is through this effort that CFP Board maintains it's high standing as a credentialing organization. I will use the summary provided by CFP Board to organize my comments.

• Change the term "registrant" to "professional eligible for reinstatement,"


• As the person who coined this term originally, I support the change.


• Amend Article 2.6 to differentiate the roles of "CFP Board Counsel" and "CFP Board Designated Counsel"


• This change seems sensible too. In essence this recognizes the role of CFP Board Designated Counsel and limits it appropriately.


• Remove Article 4.5, "Forms of Discipline Concerning Candidates,"


• This change is overdue. Candidates and CFP® professionals should be treated differently. The Fitness Standards provide sufficient methods to deal with candidates with issues that occurred prior to application for certification.


• Amend Article 5.1, "Issuance of Order to Show Cause,"


• This places the burden on CFP Board where it belongs.


• Add a new provision, "Article 5.7 - Automatic Interim Suspension,"


• I do not support the addition of an automatic interim suspension from which there is no appeal. The use of interim suspensions in the past appears to deal with these issues effectively and in an expeditious manner. I fail to see justification for immediate action. It is highly unlikely that the public would be dependent on CFP Board's issuance of an automatic suspension to learn of misconduct by such a notorious CFP® professional.


• Add a new provision, "Article 5.8 - No Appeal Right,"


• See the previous comment. Even the most well-engineered process can suffer from poor implementation when operated by humans. An appeal process is an effective way to provide relief when something goes awry.


• Remove from Article 3(f) a Respondent's right to assert the constitutional privilege against self-incrimination


• CFP Board's process is essentially administrative in nature and does not merit the same privileges granted in a court setting. CFP® professionals promise to abide by CFP Board rules, policies and procedures when they petition for the rights to use the marks. Participating fully in CFP Board's disciplinary process is at the core of that promise. A hearing process becomes meaningless when there is nothing to hear.


• Add a new provision, "Article 7.6 - Request for Extension or Continuance,"


• The use of the existing continuance policy may result in long delays before cases come up for hearing. This creates additional burdens for CFP Board in terms of staffing and case management. Limiting continuances makes sense as does including same in the written description of the disciplinary process.


• Add a new provision, "Article 9.4 - Recommendation," to allow CFP Board Counsel and CFP Board Designated Counsel to provide the Commission with a recommendation regarding the appropriate sanction.


• I advocated to give CFP Board Counsel this authority in the past. It will help to provide more consistency in disciplinary results and reduce cases where hearing panels reach decisions that are unexpectedly harsh or lenient.


• Amend Article 12.2, "Duty to Report Criminal Convictions or Professional Discipline," .


• I oppose the weakening of this requirement. These are serious events that are rare in the career of a CFP® professional. I see no benefit to allowing disbarred and felonious advisers additional time to inform their certifying body of their malfeasance.

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BRIAN L. DIETZ, CFP®

Date: August 23, 2011

I don't see anything objectionable in these amendments to Board rules.

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DON HAISMAN, CFP®

Date: August 19, 2011

I have been practicing full-time as a CFP®-Practitioner since 1967.I have reviewed the revisions to the Disciplinary Rules and Procedures and completely concur with the changes. Good job with the proposed changes. I have no additional changes to propose.

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CLYDE G. HOHENSTEIN, CFP®

Date: August 22, 2011

No comment. Excellent work.
Thank you.

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JAMES KNAUS, CFP®

Date: August 23, 2011

Please review my suggested changes and corrections as noted below.

• Article 1: The word proscribed is not correct. The word should be prescribed. [Proscribe is to limit, prohibit, forbid.]
• Article 4: In the last sentence, there is a redundancy, beginning with in these cases…
• Article 5.6: In the last sentence, remove the apostrophe from professional.
• Article 6.3: In the first sentence, change the word to exist (from exists).
• Article 7.2: Remove the word or. It should read "…of the Respondent as provided…."
• Article 13.1: In the first line, remove the comma. It should read "…of the proceeding and the interests…."
• Article 13.1 (b): Remove the word been. It should read "…alleged to have violated….
• Article 15.4: Move the word again. It should read "…two years to petition again for reinstatement."
• Article 17.4: Correct the spelling of website.(It shows as webstite.)

Note that none of the corrections are substantive. That means that you have done an excellent job of making the revisions.

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AMY JO LAUBER, CFP®

Date: August 20, 2011

I would like to comment on the proposed changes to the disciplinary procedures. Admittedly, I don't know legal procedure well, but I feel the proposed changes to Article 5.8, I believe, "No Right to Appeal" is very unfair. The description of changes state that the certificant subject to suspension, based on evidence found by the CFP Board, is not allowed to appeal. The evidence found by the CFP Board may be inaccurate or faulty. Obtaining the CFP designation is a difficult and time consuming goal. I agree that every certificant must uphold the marks through ethical behavior, certainly, but there are circumstances that could reasonably be misunderstood. Facing the possibility of losing the marks without a proper appeal will possibly prompt fewer people to pursue such a worthy goal of obtaining them in the first place.

Thank you for the opportunity to comment.

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DAN MOISAND, CFP®

Date: September 8, 2011

Many thanks to the CFP Board for putting these possible changes out for comment.

The changes are sensible. I particularly like that the changes to section 5.1 Interim Suspensions would explicitly put the burden on CFP Board to demonstrate that it has received evidence for the conduct that gives rise to such a suspension. This reduces the need for an ability to appeal an interim suspension. The respondent would have ample opportunity to state their case once the criminal or professional conduct matter was resolved through the CFP Board's process. In practice, I doubt anyone would try to appeal such a suspension while the underlying conduct matter was still in question. I hope other commenters remember that Interim Suspension only come into play when the conduct represents an "immediate threat to the public, or has engaged in conduct the gravity of which impinges upon the stature and reputation of the marks" or a serious crime or professional suspension as defined in 12.5 and 12.6.

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ATAMARA S. MONROE, ESQ.
FINANCIAL PLANNING STANDARDS BOARD LTD.

Date: September 26, 2011

Financial Planning Standards Board Ltd. (FPSB) is pleased to provide its comments on CFP Board's revisions to its Disciplinary Rules and Procedures.

FPSB is a nonprofit association that manages, develops and operates certification, education and related programs for financial planning organizations so that they may benefit the global community by establishing, upholding and promoting worldwide professional standards in personal financial planning. FPSB's commitment to excellence is represented by the marks of professional distinction – CFP, CERTIFIED FINANCIAL PLANNER and

As the other CFP marks owner in the world, FPSB has a common interest with CFP Board in ensuring that the CFP marks represent consistent, high educational, examination, experience and ethical standards for financial planning professionals so that we can benefit the public seeking the services of competent and ethical personal financial planners worldwide.

FPSB supports and welcomes CFP Board's efforts to clarify ambiguities, incorporate best practices of professions using a disciplinary process, and strengthen CFP Board's investigative and hearing processes.

Our comments are provided to you in the spirit of this mutual cooperation and commitment, and fall into the following categories:

(1) Addition of the "Adverse Inference" Provision

(2) Other Specific Questions and Suggestions

Please feel free to contact me if you have any questions or comments regarding FPSB's feedback. Thank you for the opportunity to provide input on CFP Board's suggested revisions to the Disciplinary Rules and Procedures.

1. Addition of the "Adverse Inference" Provision
   
   In its revised Disciplinary Rules and Procedures, CFP Board includes new Article 6.2(b) stating that "Failure to respond to a request for information may give rise to an adverse inference with respect to the underlying subject matter."
   
   "Adverse inference" is usually defined as a legal inference adverse to the concerned party drawn from silence or absence of requested evidence. Adverse inference is typically used in instances where a party has destroyed evidence relevant to a claim. As a rule, for an adverse inference (that the missing evidence would have been unfavorable to the concerned party) to be drawn, there must be some showing that the concerned party intentionally destroyed the evidence or otherwise acted in bad faith.
   
   It would be helpful to those going through CFP Board's disciplinary process to have more specificity or guidance regarding the circumstances in which CFP Board may decide to make an adverse inference. What exactly is a "failure to respond?" Ignoring all communications from CFP Board is clearly a failure to respond, and the Disciplinary Rules and Procedures already provide a mechanism for issuing a complaint and eventually revoking a Respondent's certification for not responding to CFP Board (See Article 7.4). Does "failure to respond" include a Respondent's decision not to provide specific evidence that has been requested? Assuming yes, will this provision allow the Commission to consider a disciplinary case, and possibly issue a discipline, based on an adverse inference when there is no other evidence available? If so, how does this reconcile with Article 9.3, which provides that proof of misconduct must be established by a preponderance of the evidence?
   
   It is likely that this provision will result in a perception that a Respondent must prove his or her "innocence" rather than CFP Board proving misconduct by a preponderance of the evidence. Such a perception could have a negative impact on CFP Board's entire disciplinary process. CFP Board might want to consider including more information to clarify under what circumstances it may make an adverse inference.
   
   
2. Other Specific Questions and Suggestions
   
   Article 5: Interim Suspension Status FPSB has some questions on a few of the revisions in this Article.
   
   Currently in Article 5.1, CFP Board may issue an Order to Show Cause when it receives credible evidence that a CFP professional's conduct meets several criteria. In revised Article 5.1, "credible" has been removed, raising questions regarding the sufficiency of the evidence required to make such a decision. An interim suspension of the right to use the CFP marks is a significant action, and CFP Board might want to make it clear in its Disciplinary Rules and Procedures that it will only take such an action based on credible evidence.
   
   Revised Article 5.5 provides that a Show Cause Hearing will be held before three members of the Disciplinary and Ethics Commission. However, there are several references to the Commission in this and following Articles that create some confusion. For example:
   
   
   
   • "In making its determination whether to issue an interim suspension, the Commission shall consider all of the evidence presented." (See Article 5.5)
   
   
   • "Upon a showing of any of the factors listed in Article 5.1, an interim suspension shall be issued, unless the Commission determines that the CFP professional has provided evidence which establishes by a preponderance of the evidence…." (See Article 5.6)
   
   
   Changing the references from the Commission to the hearing panel would eliminate this confusion and ensure consistency in Article 5.
   
   The last sentence of Article 5.6 ("The fact that a convicted or suspended CFP professional's [sic] is seeking appellate review of the conviction or suspension shall not limit the power of the Commission to impose an interim suspension.") seems out of place given that the related specific provisions have been removed from Article 5.1. CFP Board might want to consider revising the language to avoid any potential confusion.
   
   New Article 5.7 provides for an automatic interim suspension without giving the Respondent an opportunity to respond. How will CFP Board ensure its disciplinary process remains fair and reasonable if a Respondent is not provided the opportunity to respond to allegations made against him or her? How does this reconcile with Article 9.3, which provides that proof of misconduct must be established by a preponderance of the evidence?
   
   The last sentence of Article 5.7 ("CFP Board Counsel will notify any CFP professional subject to interim suspension under this Article by certified mail, return receipt requested, mailed to the last known address of the CFP professional, as provided in Article 17.2.") seems to apply to Article 5.6 as well. CFP Board might want to consider making this a separate article.
   
   The title of Article 5.9 has been revised to use "revocation" rather than "suspension," but the text still refers to a professional suspension. For consistency, CFP Board might want to consider using "revocation of a financial professional license" as used in new Article 5.7.
   
   Article 8: Discovery and Evidence
   
   In revised Article 8.5, the new sentence provides that the Chair of the Commission shall be refused from serving on the Hearing Panel and participating in the "Ratification." This term does not appear to be defined anywhere in the Disciplinary Rules and Procedures. While those familiar with CFP Board's process likely understand that it refers to the power of the Commission as outlined in Article 10.2, using the undefined term "Ratification" could cause confusion for CFP professionals and the public.
   
   Article 9: Hearings
   
   New Article 9.4 provides that CFP Board Counsel shall make a recommendation to the Hearing Panel regarding the appropriate sanction in a disciplinary case. First, the use of the word "the" implies that there is only one appropriate sanction, which may not be the case. CFP Board might want to consider using "an" instead.
   
   Further, it is unclear whether this recommendation will also be provided to the Respondent. To ensure fairness and prevent ex parte communications with the adjudicating body, CFP Board might want to provide this to the Respondent and have the Article specifically state that.

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KENDRICK G. SMITH, CFP®

Date: August 19, 2011

Anything to strengthen your jurisdiction on behavior by CFP's is welcomed. I am for the recommendations.

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TROY SUMRALL, CFP®

Date: August 19, 2011

Looks well thought out. Appreciate the effort involved.

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NEAL VAN ZUTPHEN, CFP®

Date: August 19, 2011

Add a new provision, "Article 5.7 - Automatic Interim Suspension," to allow CFP Board staff to automatically issue an interim suspension in instances where CFP Board has received evidence that any of the enumerated conduct has occurred. The proposed amendment will allow for greater protections of the public while CFP Board continues its investigation. Add a new provision, "Article 5.8 - No Appeal Right," to inform Respondents that there is no right to appeal an Interim Suspension Order. Perhaps I am misunderstanding but it seems that this provision in Article 5.7 and Article 5.8 is one where the certificant is first considered guilty and then must prove innocence. For some reason, I've always thought our system was one where one is assumed innocent and must be proven guilty. Am I misunderstanding the effect of these amendments?

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