The Certified Financial Planner Board of Standards has taken the last step necessary to pave the way for enforcement of its new Code of Ethics and Standards of Conduct starting on June 30, the board announced Friday.
The board approved numerous procedural rules, which are designed to spell out how and when the new code and standards will be enforced, said Kevin R. Keller, CEO of the CFP Board. The new requirements for CFP professionals have been more than five years in the making and have gone through several public comment periods to get feedback from advisors before the implementation date.
The procedural rules clarify the new process for advisors and for the public, added Leo Rydzewski, CFP Board’s general counsel. Information about the new code and standards, which were enacted October 1, 2019, but will not be enforced until June 30, is available on the board’s website, www.CFP.net. To help CFP professionals understand the updated enforcement process outlined in the new procedural rules, the CFP Board created an enforcement process guide, which includes flow charts that describe the investigative, settlement and hearing processes.
Under the new standards of conduct, the 87,000 CFP mark holders will be required to act as fiduciaries, putting the interests of their clients above their own, whenever they are providing financial advice. The fiduciary standard is extended to brokers or dually registered advisors. The procedural rules consolidate and replace the Disciplinary Rules and Procedures and the Appeal Rules and Procedures that were used by the CFP Board until now. The new standards define “financial advice” broadly as any recommendation to purchase, hold or sell any financial asset.
Among other things, the rules announced Friday consolidate procedures, expand the ability of the CFP Board to obtain information about advisors, make information on the new processes more accessible to CFP professionals, and clarify who may review confidential information.
The rules also do such things as establish expedited processes for complaints involving advisors who file for bankruptcy and limit the time in which the CFP Board staff can issue notices of investigations, which ordinarily will be seven years after the alleged violation. The rules also limit the time during which the CFP Board can issue a complaint against a CFP mark holder after starting an investigation.