CFP Board Implements Reforms to Strengthen Enforcement of Its "Code of Ethics and Standards of Conduct" for CFP® Professionals
Certified Financial Planner Board of Standards, Inc. (CFP Board) today announced additional efforts to strengthen the enforcement of its Code of Ethics and Standards of Conduct (Code and Standards) for CFP® professionals, which will begin on June 30, 2020.
These modernizations to CFP Board’s enforcement program, which are an essential part of the organization’s work to implement its new Code and Standards, are consistent with the findings and recommendations of the Independent Task Force on Enforcement (Task Force). Since December 2019, CFP Board has invested significant resources, both financially and operationally, to implement many of the Task Force’s recommendations.
Among the actions CFP Board has taken are facilitating consumer access to BrokerCheck and IAPD information from listings of CFP® professionals on its websites, letsmakeaplan.org and CFP.net; requiring CFP® professionals to make ongoing disclosures of an expanded category of information within 30 days; and conducting updated background checks on all 87,000+ CFP® professionals to detect, investigate and adjudicate matters that may indicate misconduct by CFP® professionals, in accordance with CFP Board’s Procedural Rules.
“These actions are essential and necessary to strengthen CFP Board’s oversight of the CFP® certification ethical standards, which will benefit all Americans and reinforce the confidence and security that comes from working with a CFP® professional,” said Jack Brod, CFP®, 2020 Chair of CFP Board’s Board of Directors. “The Board of Directors recognizes there are gaps to close, has prioritized this work and has supported the funding required to implement these improvements, including more than $5 million to complete the background checks, investigate and adjudicate matters of possible misconduct.”
The updated background checks on all CFP® professionals – which are similar to the background checks CFP Board conducts for all individuals applying for CFP® certification and include review of BrokerCheck and IAPD and other publicly available records – detected conduct requiring investigation related to approximately 1,240 individuals, or 1.4% of the total CFP® professional population. Nearly 40% of these investigations involve a tax lien or a civil action that is not customer related. All matters will be reviewed on a case-by-case basis, but not all matters will require adjudication. For any cases that conclude with issuance of a public sanction, the public sanction will appear in a press release and on the CFP® professional’s disciplinary history on CFP Board’s websites.
“All of us at CFP Board are steadfast in our commitment to strengthening CFP Board’s enforcement program. As a certifying and standards-setting organization, we are dedicated to upholding our strong competency and ethics standards and to raising those standards when appropriate, for the benefit of the public. These recent reforms are critical and reflect the dedication of CFP Board’s Board of Directors and staff to fulfilling our mission at a time when the demand for quality financial planning advice is at a premium,” said Kevin R. Keller, CAE, CEO of CFP Board.
In addition to the actions referenced above, CFP Board has taken the following actions to strengthen the enforcement of its Code and Standards:
Developed a process to review the BrokerCheck and IAPD databases on a regular basis to obtain reports that identify new disclosure information related to CFP® professionals.
Created a database of state regulatory actions related to insurance and securities licensing for use when evaluating candidates for CFP® certification. This includes a process for reviewing the relevant state regulatory websites on a regular basis to obtain recently reported information.
Developed a process to review a leading national database to obtain reports that identify criminal records, tax lien filings, bankruptcy filings, and civil lawsuit records.
Initiated a redesign of the format and content of its consumer website, letsmakeaplan.org, including the site’s listings of CFP® professionals, to ensure accurate and timely information about CFP® professionals is available to consumers. The updated website will launch by December 31, 2020.
Increased from biannually to annually its certificant ethics attestation as part of the CFP® certification renewal process and designed a comprehensive update of the attestation questions for implementation later in 2020.
Updated its processes to ensure that information about the investigation of a CFP® professional is shared with a grievant who raises concerns about that CFP® professional to CFP Board.
Response to Task Force Recommendations
The Task Force’s report, released last December, together with CFP Board’s response, included recommendations to enhance CFP Board’s enforcement program. The increased investment to undertake thorough background checks of all current CFP® professionals is consistent with those recommendations. In addition, CFP Board is currently working on further reforms, including:
- Strengthening the sanction for failing to self-report information to CFP Board. CFP Board will form a Commission in 2020 to review and develop recommendations for revisions to the existing Fitness Standards and Sanction Guidelines, and this will be part of the Commission’s mandate. CFP Board will invite public comment on any proposed changes to these Fitness Standards and Sanction Guidelines.
- Defining, in written policies, the specific enforcement outcomes that the Board of Directors expects CFP Board staff to achieve and to monitor rigorously the CEO’s performance against those expectations.
- Engaging in a comprehensive governance review that will address a number of recommendations by the Task Force with assistance from the governance consulting practice of a major, global consulting firm. Actions or decisions on these additional recommendations will be made public as they become available.
- Conducting a comprehensive review of the organization's Enterprise Risk Management (ERM) program, with assistance of a global ERM consultant.
CFP Board will make public additional information as its Board of Directors determines further actions regarding CFP Board’s enforcement program.
Certified Financial Planner Board of Standards, Inc. is the professional body for personal financial planners in the U.S. CFP Board sets standards for financial planning and administers the prestigious CFP® certification – one of the most respected certifications in financial services – so that the public has access to and benefits from competent and ethical financial planning. CFP Board, along with its Center for Financial Planning, is committed to increasing the public’s awareness of CFP® certification and access to a diverse, ethical and competent financial planning workforce. Widely recognized by firms and consumer groups as the standard for financial planning, CFP® certification is held by more than 90,000 people in the United States.
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