The CFP Board of Standards has begun its efforts to hold CFP mark holders to higher standards in conjunction with its new code of ethics and standards of conduct, according to Leo Rydzewski, the CFP Board’s general counsel.

And as part of that effort, the board has reviewed its 87,000 certificate holders to see how many may have violated CFP standards. It found 1,240 advisors, or 1.4% of its license holders, warrant further investigation, Rydzewski said Wednesday during a press conference. Of the violations found, approximately 40% involved tax liens or civil actions that were not customer related.

The press conference was held to announce the latest steps in the implementation of the new code of ethics, which officially go into effect next Tuesday, June 30.

In its review of mark holders, the board looked at state financial regulations, civil and criminal cases, and bankruptcy records. This constitutes a more far reaching investigation by the CFP Board than was undertaken in the past and is part of the revamping process that included the issuance of the new code of ethics.

Among the new standards of conduct is a requirement that the board use a variety of sources to review the professional records of certificate holders, a process that has already started. When the requirements go into effect at the end of the month, advisors will be required to self-report to the CFP Board any legal actions taken against them within 30 days, instead of the previously required two years.

In order to carry out the increased surveillance of advisors, the CFP Board has allocated $5 million for two years, hired three permanent employees, and engaged 20 lawyers and staff members on a contingency basis, said Rydzewski and Kevin R. Keller, the CFP Board's CEO. It is too early to know if these extra expenses will require an increase in fees for certificate holders, they said.

Some, but not all, of the advisors subject to investigation have been notified.

The implementation of the new code is the culmination of years of work by the board. The formal announcement of the new standards was made in March 2018. Additional enforcement efforts were also announced Wednesday that carry out the recommendations of the board’s independent task force on enforcement.

“These actions are necessary to strengthen CFP Board’s oversight of the CFP certification ethical standards, which will benefit all Americans and reinforce the confidence and security that comes from working with a CFP professional,” said Jack Brod, chair of the CFP Board’s board of directors.

The board has taken a number of other actions along with the release of its new code of ethics. For one thing, it has developed a process to review BrokerCheck and the Investment Adviser Public Disclosure databases to find potential violators. The board has also created a database of state regulatory actions against those with insurance and securities licenses when evaluating candidates for CFP certification. And the board will review a leading national database to obtain reports identifying criminal records, tax lien filings, bankruptcy filings and civil lawsuit records.

A newly designed website will be unveiled by the end of the year at to increase transparency and consumers’ access to CFP professionals’ information.

The CFP Board is currently working on other reforms as well. For instance, the board will impose stiffer sanctions on advisors who fail to self-report information to it. The board will also define the specific enforcement outcomes that it expects its staff to achieve and monitor the CEO’s performance against those expectations.