CFP Board Increases Sanction for Self-Reporting Failures, Requests Comments on Proposed Appeals Commission

Certified Financial Planner Board of Standards, Inc. (CFP Board) announced today that its Board of Directors (Board) has adopted changes to CFP Board’s Sanction Guidelines and Procedural Rules. The updated Sanction Guidelines recommends a public censure for failing to timely report to CFP Board certain categories of information that may reveal misconduct and for failing to provide an accurate ethics declaration to CFP Board. CFP Board also announced today that it has issued for public comment a proposal to establish an Appeals Commission to adjudicate appeals. The deadline to submit comments is December 14, 2021.

Revised Sanction Guidelines and Procedural Rules

CFP Board’s Sanction Guidelines promotes consistency in the issuance of sanctions for similar violation of CFP Board’s Code of Ethics and Standards of Conduct (Code and Standards). The Procedural Rules outline processes for investigating alleged misconduct and enforcing the Code and Standards in a manner designed to be fair to CFP® professionals and credible to the public.

The new revisions to the Sanction Guidelines and Procedural Rules:

• Increase the recommended sanction from a private censure to a public censure for a) failing to timely report (within 30 days) to CFP Board certain categories of information that may reveal misconduct and b) for failing to provide an accurate ethics declaration to CFP Board.
• Recognize timely reporting on Form U4 (Uniform Application for Securities Industry Registration or Transfer) as equivalent to timely reporting to CFP Board.
• Stipulate that a CFP® professional may accept the public censure for these matters without a hearing and without payment of a hearing fee.

“We thank everyone who took time to provide input on the proposed revisions to our Sanction Guidelines and Procedural Rules,“ said CFP Board CEO Kevin R. Keller, CAE. “These changes are the latest developments in CFP Board’s work to strengthen enforcement of the Code of Ethics and Standards of Conduct for CFP® professionals. Timely and accurate self-reporting to CFP Board helps us maintain effective enforcement processes that are fair to CFP® professionals whose conduct is being evaluated and credible to the public.”

The revisions were recommended to the Board by CFP Board’s Commission on Sanctions and Fitness following a public comment period that took place from July 28-September 21, 2021. After considering public comments, the Board clarified that the circumstances set forth in the Sanction Guidelines should constitute a mitigating factor and revised two of the circumstances that may mitigate the sanction to be lower than a public censure. Such mitigating factors now also will include:

1. Circumstances of a similarly catastrophic nature to an emergency or medical issue that prevented a CFP® professional from timely reporting the information.
2. Circumstances where a CFP® professional reports the information shortly after the 30-day reporting deadline, and before CFP Board contacts the CFP® professional about the information.

The component of the final revised Sanction Guidelines and Procedural Rules concerning the “Inaccurate Ethics Declaration” will take effect on January 1, 2022. The component concerning the “Failure to Timely Report Information” to CFP Board will take effect on January 1, 2024.

CFP Board plans to raise awareness of the self-reporting requirements through:

• A supplement to the CFP Board Ethics Continuing Education program required for renewal of CFP® certification.
• Outreach to CFP® professionals and to firms that employ CFP® professionals.

Proposed Revisions to Procedural Rules to Establish Appeals Commission

CFP Board has issued for public comment a proposed amendment to its Procedural Rules that would create a new Appeals Commission to adjudicate appeal hearings. These hearings are currently adjudicated by the Board’s Code and Standards Enforcement Committee, which oversees CFP Board’s enforcement processes. If the proposed changes are adopted, the new Appeals Commission would have authority to issue CFP Board’s final decision when an individual appeals a final order of the Disciplinary and Ethics Commission (DEC) or an Administrative Order.

The proposal would establish an Appeals Commission comprising five members who currently do not sit on the Board. Members may include former Board directors, former DEC members, public members, individuals with regulatory experience, and CFP® professionals representing various business and compensation models.

“We welcome input on the proposal to establish an Appeals Commission,” added Keller. “This proposal is intended to help ensure that appeals continue to be adjudicated fairly. It also allows our Board of Directors to remain focused on organizational strategy, policymaking and monitoring of our enforcement processes.”

A redlined version of the proposed revisions to the Procedural Rules can be found here. 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 December 14, 2021.