The Certified Financial Planner Board of Standards said it will implement additional measures to strengthen the enforcement of its Code of Ethics and Standards of Conduct, beginning with enhanced background checks for its roughly 87,000 CFP professionals.
The updated checks have already detected possible issues with 1,240 of its members, or 1.4% of the total CFP professional population, the organization said.
Nearly 40% of these investigations involve a tax lien or a civil action that is not customer-related. Not all matters will require sanction, but for those that do, it will appear in a press release and on the CFP professional’s disciplinary history on CFP Board’s websites.
The announcement is part of an Independent Task Force on Enforcement recommendations. Others include facilitating consumer access to BrokerCheck and IAPD information from listings of CFP professionals on its websites and requiring CFP professionals to make ongoing disclosures of an expanded category of information within 30 days.
“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.”
In addition, the CFP Board says it’s 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
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 the assistance of a global ERM consultant.
With more than 20 years serving financial markets, John Sullivan is the former editor-in-chief of Investment Advisor magazine and retirement editor of ThinkAdvisor.com. Sullivan is also the former editor of Boomer Market Advisor and Bank Advisor magazines, and has a background in the insurance and investment industries in addition to his journalism roots.
