CFP Board Requests Comments on Proposed Revisions to Sanction Guidelines and Procedural Rules

Certified Financial Planner Board of Standards, Inc. (CFP Board) announced today that it has issued for public comment proposed changes to CFP Board’s Sanction Guidelines and Procedural Rules. The proposed changes, if adopted, will strengthen the guidelines concerning the consequences for failing to timely report potential misconduct to CFP Board and for providing an inaccurate Ethics Declaration to CFP Board, and introduce a streamlined option for accepting those consequences. The deadline to submit comments is September 21, 2021.

The Procedural Rules outline processes for investigating alleged misconduct and enforcing CFP Board’s Code of Ethics and Standard of Conduct (Code and Standards) in a manner designed to be fair to those whose conduct is being evaluated and credible to the public. The Sanction Guidelines provide guidance on the sanction that might apply to particular violations of the Code and Standards and to promote consistency in the imposition of sanctions for similar offenses.

The proposed changes reflect the first set of recommendations from CFP Board’s Commission on Sanctions and Fitness, which was formed in February 2021 to review and recommend changes to the Sanction Guidelines and Fitness Standards for Candidates for CFP® Certification and Former Professionals Seeking Reinstatement. The Commission on Sanctions and Fitness will review the comments on the proposed changes and make a recommendation to CFP Board’s Board of Directors. The Board of Directors will decide whether to adopt the changes at an upcoming meeting. If the proposed changes are adopted, they will be announced with an effective date that allows adequate time for CFP Board to educate CFP® professionals about the reporting requirement before the revised guidelines take effect.

“Throughout the last two years, CFP Board has enhanced its detection practices so that it no longer primarily relies on self-reporting by CFP® professionals to detect potential misconduct. However, the public records we review have coverage gaps and may be subject to error. Therefore, fair and effective self-reporting remains an important feature of the enforcement program,” said CFP Board CEO Kevin R. Keller, CAE.

Added Keller: “We welcome input on these proposed changes to the Sanction Guidelines and Procedural Rules, which are intended to strengthen our self-reporting mechanisms and further CFP Board’s work to uphold our Code and Standards, for the benefit of the public.”

Proposed Revisions to Sanction Guidelines
CFP Board’s Code and Standards requires CFP® professionals to report certain categories of information to CFP Board within 30 calendar days of its occurrence. Additionally, CFP Board requires candidates and CFP® professionals to complete an Ethics Declaration that contains a series of questions that requires the individual to report certain categories of information that may reveal misconduct.

Under the current Sanction Guidelines, a “Failure to Timely Report Information to CFP Board” and/or submitting an “Inaccurate Ethics Declaration” results in a sanction guideline of a private censure.

The proposed changes increase the sanction guidelines for these two conduct categories to a public censure. For both conduct categories:

• CFP Board considered whether the appropriate sanction should be a monetary sanction instead of a public censure.
• While CFP Board concluded that a public censure is the most appropriate sanction, CFP Board is evaluating whether to impose an administrative fee on those who engage in self-reporting violations to help offset the costs of enforcement.
• The proposed sanction guidelines include factors that might make the sanction higher or lower than a public censure, depending on the circumstances.
• The proposed guidelines include a policy note indicating that no violation will be found if the information was timely reported on Form U4 (Uniform Application for Securities Industry Registration or Transfer).

“Strengthened guidelines for these requirements reflect the importance of CFP® professionals’ self-reporting obligations and their duty to act with honesty and integrity,” added Keller.

A redlined version of the proposed revisions to the Sanction Guidelines can be found here.

Proposed Revisions to Procedural Rules
CFP Board also proposed changes to its current Procedural Rules by introducing a streamlined option for accepting the consequences addressed in the proposed changes to the Sanction Guidelines.

If adopted, the proposed changes to the Procedural Rules would offer individuals who receive a Complaint alleging a single failure to timely report information or a single inaccurate Ethics Declaration an option to accept a public censure without a hearing before the Disciplinary and Ethics Commission. Those who accept the offer would not be required to pay the hearing fee.

“Updating the Procedural Rules to include an option to accept a public censure for a single failure to comply with self-reporting obligations will allow individuals to accept responsibility for a self-reporting failure,” added Keller.

A redlined version of the proposed revisions to the Procedural Rules can be found here.

Submit a Comment
Comments can be submitted to CFP Board through an online form on CFP.net. All comments submitted to CFP Board will be posted on the CFP.net website with the name of the commenter and date submitted. The deadline for comments is September 21, 2021.