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Enforcement Update: CFP Board Strengthens the Enforcement Program for its "Code of Ethics and Standards of Conduct"​

By Kevin R. Keller, CAE July 17, 2020 LinkedIn

Every American deserves access to competent and ethical financial planning advice.

Now, more than ever, this statement holds true as the nation struggles with the economic impact of the COVID-19 pandemic. With more challenges expected over the summer months, Americans will likely turn to professionals for guidance. In fact, a recent poll of CFP® professionals found that nearly two-thirds of respondents (64 percent) agree that more Americans will seek professional financial advice in the wake of COVID-19.

During these challenging times, when Americans turn to and work with a CFP® professional, they can feel confident and secure in the relationship and the financial planning advice because those holding the CFP® certification commit to CFP Board to act as a fiduciary at all times when providing financial advice to a client—placing the client’s interests ahead of their own or their firm’s.

CFP Board is dedicated to setting strong and meaningful competency and ethics standards for CERTIFIED FINANCIAL PLANNER™ professionals, as evidenced by our new Code of Ethics and Standards of Conduct (Code and Standards), which (among other things) expands the application of the fiduciary duty. We are also committed to enforcing those standards and holding our CFP® professionals accountable.

A robust enforcement program is one of CFP Board’s most important obligations and fundamental to achieving our mission of benefiting the public by granting and upholding the CFP® certification. As such, CFP Board has taken essential steps to strengthen the enforcement of our new Code and Standards.

Last summer, CFP Board assembled an Independent Task Force on Enforcement to examine and modernize our enforcement practices. In response to the Task Force findings and recommendations, which were released to the public, CFP Board introduced a number of enhancements to our enforcement program.

In particular, we committed to conducting an updated background check on all 87,000 CFP® professionals to detect, investigate, and adjudicate matters that may indicate misconduct in violation of CFP Board’s standards. We have nearly completed this process, and to date have identified matters that may indicate misconduct related to approximately 1,240 individuals, just 1.4% of the total CFP® professional population.

To complete the detection efforts as well as the appropriate investigation and adjudication of the recently identified matters, the Board of Directors approved $5 million to support the required work.

It is important to note that all matters will be reviewed on a case-by-case basis, and not all matters will require adjudication or conclude in public sanction. For any cases that do, the public sanction will appear in the CFP® professional’s disciplinary history on the consumer facing website

CFP Board has invested a significant amount of resources, both financially and operationally, to uphold our commitment to thoroughly investigate and adjudicate cases. In fact, I do not know of any other certification or designation that has the same level of enforcement efforts as CFP Board among the more than 200 professional voluntary certifications and designations recognized by the Financial Industry Regulatory Authority, Inc. (FINRA).

However, we cannot overlook critical differences between the mandates for self-regulatory organizations like FINRA and the mission and purpose of a certifying body like CFP Board. While CFP Board maintains a robust enforcement arm to uphold the standards for CFP® certification, our Board of Directors believes that some enforcement activities are more properly reserved for regulatory bodies like the Securities and Exchange Commission or FINRA. For example, CFP Board will not conduct desk audits, other periodic audits, on-site examinations, random sampling, or inspections of CFP® professionals; and we will not sanction CFP® professionals because their firm refused to provide documents and information to CFP Board.

CFP Board has taken essential steps to strengthen its oversight of the ethical standards for CFP® certification. As we begin the enforcement process of our new Code and Standards, we will continue to evaluate how to evaluate additional improvements to our enforcement processes and we remain dedicated to maintaining a process that is credible to the public and fair to those whose conduct is being evaluated.

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This article was originally published on LinkedIn on July 17, 2020.


About the Author: Kevin Keller, CAE is Chief Executive Officer of CFP Board. CFP Board’s mission is to benefit the public by granting the CFP® certification and upholding it as the recognized standard of excellence for competent and ethical personal financial planning.