CFP Board Requests Public Comment on Proposed Revisions to Rules that Govern Disciplinary Process

Also Adopts Technical Revisions and Announces Responses to FAQs on the new Code and Standards

Certified Financial Planner Board of Standards, Inc., today for public comment, issued proposed changes to the Procedural Rules that govern CFP Board’s disciplinary process. The 60-day public comment period ends January 29, 2019.

CFP Board also adopted technical revisions to the Code of Ethics and Standards of Conduct and announced a new set of responses to “Frequently Asked Questions” concerning the same Code and Standards that will become effective on October 1, 2019. Each of these documents may be found on CFP Board’s website at www.CFP.net/code. CFP® professionals and members of the public will have the opportunity to provide comments on the Procedural Rules using a form that is available on the website. They also may email comments to comments@cfpboard.org.

Procedural Rules

The proposed Procedural Rules will consolidate and replace the existing Disciplinary Rules and Procedures and Appeal Rules and Procedures. CFP Board intends for the Procedural Rules to improve the process that governs those who are subject to CFP Board’s enforcement function.

Key changes include:

• Allowing for the removal of public discipline from CFP Board’s website after the passage of time, which ordinarily will be between five and ten years from the date of the initial publication, when the discipline involved a public letter of admonition or suspension of one year or less and the Respondent has not engaged in other misconduct;
• Expanding on the ways in which CFP Board may access information during the disciplinary process, including “on-the-record” examinations;
• Clarifying who may review confidential information;
• Clarifying the duty that a Respondent and a CFP® professional who is not a Respondent has to cooperate with CFP Board during an investigation;
• Establishing an expedited process for complaints involving one bankruptcy that will allow a Respondent to accept a public censure and thereby avoid payment of a hearing fee;
• Providing that a Respondent who is the subject of an adverse final determination by a civil court will be bound by that determination in a CFP Board proceeding;
• Requiring a Respondent to obtain CFP Board staff’s agreement before presenting a settlement offer to the Disciplinary and Ethics Commission (DEC);
• Placing a time limitation on when CFP Board staff may issue a Notice of Investigation, which ordinarily will be seven years after the alleged violation, subject to certain exceptions, and placing a limit on when CFP Board staff may issue a complaint after commencing an investigation; and
• Clarifying the standard of review that applies to an appeal of a decision of the DEC to the Appeals Committee of the Board of Directors.

FAQs

In late June 2018, CFP Board formed a Standards Resource Commission to provide guidance to CFP® professionals and their firms on the new Code of Ethics and Standards of Conduct. The blue-ribbon group is composed of individuals from financial services firms and members of the public. In response to questions received from stakeholders, including during public forums held in several cities in September 2018, the Standards Resource Commission has assembled responses to Frequently Asked Questions concerning the Code and Standards. Some of the key responses to FAQs address the following:

• The structure of the Code and Standards;
• The requirements of CFP Board’s new fiduciary duty;
• The definitions of Financial Planning, Financial Advice, and other terms;
• The changes to the Financial Planning process;
• Why there are now seven steps in the Financial Planning process;
• The circumstances in which a CFP® professional is required to comply with the practice standards for the Financial Planning process, including the factors that will determine when a CFP® professional is required to provide Financial Planning when providing Financial Advice to a Client;
• The requirement to provide full disclosure of all Material Conflicts of Interest;
• The duty not to make false or misleading representations of compensation method, including when a CFP® professional may use the term “fee-only” and what a CFP® professional must do when using the term “fee-based;” and
• How CFP Board will handle bankruptcies under the new Code and Standards.

Technical Revisions

The Board of Directors of CFP Board recently adopted several technical revisions to the Code and Standards. These technical revisions do not materially change the Code and Standards; instead, they provide clarity to several sections of the document. The most significant change is to specify when a CFP® professional must provide certain information to a Client. The Code and Standards, as revised by the technical revisions, will go into effect on October 1, 2019.