Certified financial planners have a new option for resolving disputes with the CFP Board, but it comes with some drawbacks—CFPs will no longer be able to take their disputes to court.

On Thursday, the CFP Board announced it was inserting a mandatory arbitration clause into the terms and conditions of certification, the agreement that determines the relationship between CFP holders and the non-profit certifying body.

As part of the clause, certification-holders would waive their right to sue the CFP Board over disciplinary disputes.

“The CFP Board reviews the terms and conditions as part of its periodic reviews,” says Leo Rydzewski, the board’s general counsel. “That’s been a part of CFP Board’s past. After considering these issues, [the board] has evaluated and determined that the mandatory arbitration was the best way to move forward.”

The move comes after a dispute between the board and Jeffrey and Kimberly Camarda. The two Fleming Island, Fla., planners sued the board for threatening to sanction them over their use of the “fee-only” designation on the CFP Board website, a case that Rydzewski says is currently still active.

In the absence of a filing before the revised terms and conditions go into effect on May 2, the Camardas could be the last CFPs to have a dispute with the board settled through litigation.

“We are not aware of any individual who is seeking or intends to seek a fourth level of review,” Rydzewski says. “The only case that currently exists is the litigation concerning Jeffrey and Kimberly Camarda. That case will remain in the courts.”

Rydzewski says this is the first time the CFP Board has revised the terms and conditions in nearly a decade.

“The CFP Board could have staff resolve these issues and issue discipline itself, but it doesn’t do that,” Rydzewski says. “The CFP Board currently has a three-step disciplinary process that’s robust. … We haven’t cut off an avenue [for resolution]. We have provided a different avenue.”

Arbitration would be added as a fourth level of review to the CFP’s existing disciplinary process. The process begins with a formal staff investigation to determine whether prior cause exists. The CFP Board’s staff may then issue a complaint, which is reviewed by the Disciplinary and Ethics Commission, which consists of certification-holders and members of the public (rather than board members or staff).

If a CFP professional is disciplined by the commission, he or she can then appeal the decision to the Appeals Committee of the CFP Board of Directors, which can decide whether to affirm the decision.

“The CFP Board determined that a fourth level of review should be conducted through arbitration rather than litigation in court,” Rydzewski says. “Arbitration is more private, quicker and may be less costly than litigation.”

Arbitrators, who will be judges with at least five years of experience on the bench, will be proposed by the American Arbitration Association. CFP Board representatives and the appellant will have the option to strike and rank proposed arbitrators. Then the AAA will choose a panel of three arbitrators from the pool in accordance with the recommendations of both parties.

“If a CFP has a meritorious claim, the CFP Board will pay the full cost of arbitration, fees, the AAA’s fees and $30,000 of the CFP’s attorney fees,” Rydzewski says.

The CFP Board is also clarifying its relationship with the Financial Planning Standards Board, which owns rights to the CFP certification outside of the U.S., and how the credentials may be used internationally.

The changes also formalize the CFP Board’s use of background checks, already standard policy, to review certification applicants.

Rydzewski says that the CFP Board did not consult certification-holders before making the changes.

“We do expect that we’ll engage in a dialogue with CFP professionals once this has been released,” Rydzewski says.

When the new terms and conditions go into effect on May 2, they will be binding on all certification holders.