The CFP Board’s Board of Governors will deliberate on Wednesday whether to postpone enforcement of their Code of Ethics and Standards of Conduct in response to pressure from the brokerage industry and the Financial Planning Association. Some groups have even asked the board to consider CFP professionals compliant if they meet Securities and Exchange Commission’s new, non-fiduciary retail conduct rules instead.
“Our Board will be discussing, among other things, the requests of FPA (Financial Planning Association) and other organizations to provide additional flexibility in the enforcement date of the new Code and Standards, which remain effective October 1, 2019,” the CFP Board said via email.
Sources close to the board said that while the group may delay enforcement three to six months, as they have done in the past to allow firms and practitioners to get up to speed on new standards, CFP professionals would still be expected to implement and comply with the standards beginning October 1.
The CFP Board’s new standards extend an explicit fiduciary duty to the group’s nearly 85,000 CFP professionals. About 36,000 CFP professionals who are brokers or dually-registered do not currently operate under the higher fiduciary standard.
If the deadline for enforcement of the CFP standards is extended, complaints and disciplinary proceedings against CFP professionals would be adjudicated using the former standards during the postponement.
Unlike the SEC’s Reg BI, the CFP Board code creates an explicit fiduciary standard for brokers and dually-registered advisors—something the brokerage industry has fought for years.
The American Securities Association (ASA), a trade group representing regional broker-dealers continued that battle in a letter its CEO sent to the CFP Board a letter last week asking the group to defer to the SEC’s non-fiduciary rules as full compliance for CFP professionals
“We are concerned that attempts by any private organization to subvert the SEC’s authority as the only nationwide regulator of investment professionals in the securities industry will confuse, and ultimately, harm America’s Main Street investors,” ASA’s CEO Christopher A. Iacovella said in the letter to the CFP Board.
“Financial services firms are not legally bound to recognize private standards and assume no legal obligation for them,” Iacovella continued.
“The certainty provided by the SEC Rules is critical to the functioning of our capital markets and to investor protection. ASA members will continue to supervise their investment professionals – as they always have - in accordance with federal securities laws and regulations,” he said.