CFP Board forms commission to strengthen sanctions guidelines

The Certified Financial Planner Board of Standards Inc. announced Monday it has launched an effort to revise the sanctions it can impose on CFPs who fail to comply with the new advice requirement attached to the credential.

The CFP Board established a 15-member commission to review and recommend changes to its sanction guidelines for current mark holders as well as its fitness standards for candidates for certification.

The documents outline the range of possible punishments for violations of the CFP Board’s Code of Ethics and Standards of Conduct. The code now includes a strengthened investment advice standard that went into force on June. 30.

All CFPs — including brokers — now have to meet a fiduciary standard at all times when providing investment advice. Under the previous code of ethics, fiduciary duty only applied to CFPs when they worked with clients on financial planning.

The commission “will be proposing possible sanctions for violations of the fiduciary standard as well as other standards embodied in our code of ethics,” said CFP Board CEO Kevin Keller.

CFP Board sanctions currently include private and public censures and suspensions or revocations of the credential. The sanctions guidelines are used by the CFP Board’s Disciplinary and Ethics Commission when adjudicating enforcement matters.

The CFP Board “will soon face a new wave of potential enforcement cases” related to credential’s fiduciary standard, Michael Kitces, head of planning strategy at Buckingham Wealth Partners, said in a series of tweets on Monday. “New guidelines are definitely needed.”

The commission is composed of representatives from the financial industry and consumer advocacy organizations as well as individual CFPs and a state regulator. Their work on the sanctions guidelines likely won’t conclude until 2022, Keller said.

The commission’s recommendations will be released for public comment before being adopted. The CFP Board is hosting two virtual forums on Feb. 18 to begin gathering input on sanctions reform.

The work on revising the sanctions guidelines follows reforms last year to the CFP Board’s enforcement procedures and governance practices.

The CFP Board wants the enforcement process “to be credible to the public and fair to certificants,” Keller said. “This is another step on the road toward that end.”

Some skeptics have questioned whether the CFP Board, which is not a regulatory body, can actually put teeth in its new fiduciary standard.

But Kitces expressed hope for the outcome of the commission’s sanctions review.

“The CFP Board has signaled throughout that it intends to get more serious about enforcement of its CFP standards,’ Kitces Tweeted. “New sanctions guidelines — with a credible commission to formulate them — is another step in that direction and a key affirming signal.”

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