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CFP Board puts planners on notice as stricter enforcement looms

CFP-Board-Headquarters-credit-Jeffrey Sauers

When the CFP Board's new standards of conduct take effect in November, not only will all certified planners be considered fiduciaries when providing advice, but the board will begin taking steps toward a stricter enforcement regime.

"Setting and enforcing ethical standards for CFP professionals is one of CFP Board's most important responsibilities," Chairwoman Susan John said in an online presentation discussing the new standards.

The CFP Board has convened a task force charged with developing recommendations for improving its enforcement operations, and John, responding to a question from Financial Planning, indicated that process will culminate in closer scrutiny and more stringent enforcement of certified planners.

"I think that's implicit in our investigation of our current procedures, and we will be taking the recommendations of the independent task force, which I think are looking at exactly that," John said.

While specific recommendations are not yet determined, John stressed the task force will scrutinize how the board disciplines its certificants. That could lead to changes on a variety of fronts.

"They will be looking at the whole enforcement process, from background checks through investigations and hearings to the way we publicize outcomes and the information we share on our website listings," John said.

The task force's work follows an earlier effort within the CFP Board to overhaul its enforcement process. Last November, the board issued a request for public comment on a series of proposed enforcement reforms that could offer some insight into what the task force might recommend.

Those proposals called for expanding the tools the CFP Board can use in collecting information in an investigation, including the ability to conduct so-called on-the-record exams and clarifying when CFPs must cooperate with the board amid an investigation.

The CFP Board put those proposals "on hold" as it empaneled the enforcement task force, which is expected to deliver its recommendations shortly ahead of the CFP Board's board of directors meeting in November, according to John. Recommendations will be published soon after they are delivered to the board of directors, she said.

"You have to know that we probably will not be seeing the task force recommendations until shortly before our board meeting, so while many may expect that we make this public immediately, the board needs an opportunity to digest and understand the recommendations and to develop a plan to move forward with implementation," John said.

In the meantime, the board has pushed back the enforcement date for its new Code of Ethics and Standards of Conduct to June of 2020, though organization leaders have made clear that they expect CFPs to be revisiting their compliance program ahead of that date.

"We want all CFP professionals to read, understand and comply with new code and standards by the October 2019 effective date," said chair-elect Jack Brod. "The enforcement date allows more time for CFP professionals and firms to adjust before the new code and standards are enforced."

That timing coincides with the onset of the SEC's Regulation Best interest, which will allow "CFP professionals and their firms to adapt to the new standards from CFP Board and the SEC at the same time," Brod said.

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