The Certified Financial Planner Board of Standards has unveiled a new framework for its disciplinary arm to follow when taking action against a member, the first such standards the certification group has issued in its history.
The Sanction Guidelines are designed to ensure that the CFP Board's Disciplinary and Ethics Commission is consistent in its oversight and enforcement activities, while also articulating the process for the benefit of members.
"These guidelines will help CFP professionals understand what types of punishment they may receive for violating the rules they have agreed to as well as provide staff and the Disciplinary and Ethics Commission clear guidance on the appropriate sanction for a violation," Kevin Keller, CEO of CFP Board, said in a statement.
Typically the CFP Board begins an ethics investigation with a letter sent to the individual or firm in question. Then, parties under suspicion are invited to submit responses, and then to offer contesting evidence at a misconduct hearing.
Once the board has determined that a financial planner has committed an infraction, enforcement activities can vary from what the organization calls a private letter of censure to a public rebuke or the suspension or revocation of a member's certification, which would strip the offending party of the right to display the CFP Board logo.
The CFP Board noted, however, that its enforcement bureau will not be required to hew to the new guidelines, but that they instead will serve as a framework to steer its oversight activity.
"[T]he DEC is not bound by the Sanction Guidelines, which are intended, along with anonymous case histories, to guide the DEC in its decision making," the CFP Board said in a news release.
"The DEC may deviate from the sanction guideline if there are aggravating factors that warrant a more severe sanction or mitigating factors that warrant a less severe sanction."
In its guidance for the new standards, the CFP Board cites numerous infractions that could trigger an enforcement action, including breach of contract or fiduciary duty, conflict of interest and books and records violations.
The CFB Board's directors voted to approve the Sanction Guidelines at their July meeting, following a comment period of 45 days. The guidelines will take effect Aug. 27.
The CFP Board plans to conduct a Webinar on Aug. 14 to brief financial planners on the new oversight regime.
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