The CFP Board, which sets voluntary standards for more than 101,000 financial planners who hold its certificate in the U.S., has overstepped its authority and become a “de facto regulator,” the Securities Industry and Financial Markets Association (Sifma), a Wall Street trade group, alleges in a new white paper.

Sifma says it produced the 16-page white paper to document “the growing concern of financial services firms with CFP Board’s self-created and expanding role as a de facto, private regulator of CFP certificants by establishing separate rules, guidance and standards, conducting investigations, bringing enforcement actions, imposing sanctions, and publishing related information about CFP certificants online.”

The CFP Board’s regulatory activities “duplicate and conflict with existing SEC and FINRA rules, and create major regulatory, supervisory and reputational risks for the firms that employ CFP certificants," the securities industry trade group said in the white paper.

Sifma President and CEO Kenneth E. Bentsen Jr. said in a statement that the trade group and its members “are committed to addressing and ameliorating the significant risks imposed by CFP Board’s regulatory regime. We look forward to working collaboratively with CFP Board, and the SEC and FINRA, to develop long-term workable solutions that benefit all affected parties.”

The CFP Board has “received SIFMA’s white paper on Monday afternoon, and we are reviewing its recommendations,”  a board spokesman said. “We will consider SIFMA’s input as we have with all public comments on our ethics documents, including CFP Board’s Procedural Rules, Sanction Guidelines, Fitness Standards and Code of Ethics and Standards of Conduct."

The CFP Board “has an established, transparent process for upholding its standards, incorporating regular outreach and opportunities for feedback and public comment," the spokesman said. "We always welcome meaningful dialogue with SIFMA, the SEC, FINRA and other stakeholders.”

Sifma said the CFP Board’s tougher sanctions, which can include being suspended and barred from use of the CFP designation, “incentivize” CFPs to voluntarily produce documents and information to CFP Board."

The “significant concern for the firms that employ or associate with CFP certificants is that in certain cases, CFP certificants will likely produce firm materials to CFP Board that should not be produced, absent the firm’s informed consent, and/or Regulatory Materials that may trigger regulatory reporting obligations by the firm without the firm’s knowledge,” said Sifma, which represents the interests of Wall Street banks, broker-dealers and insurance companies.

Sifma is also concerned that the board requires that CFPs’ infractions have to be reported earlier in the process to the CFP Board than the SEC and FINRA require.

The concern is that CFPs “will likely produce Firm Materials to CFP Board that should not be produced, absent the firm’s informed consent, and/or Regulatory Materials that may trigger regulatory reporting obligations by the firm without the firm’s knowledge,” Sifma said.

The group said it wants the CFP Board to "eliminate its rules and standards that duplicate, conflict with, and/or impose obligations in addition to, existing SEC and/or FINRA rules and standards."

The trade group is also asking the CFP Board to do the following:

• Implement “safeguards around” the document and information requests it makes to CFP professionals.
• Provide additional notices to CFP certificants’ firms regarding “CFP Board investigative and enforcement milestones, and other currently unreported events."
• Provide timely notice and copies to the firms of any firm or regulatory materials produced by a CFP certificant to the CFP Board.