A new report from an industry trade group expresses concern over the regulatory activities of the Certified Financial Planner Board of Standards, reports Financial Advisor.
The Securities Industry and Financial Markets Association (SIFMA) released a 16-page white paper analyzing the risks to financial services firms over what it calls the CFP Board’s “continually expanding role as a de facto private regulator for CFP Certificants.” SIFMA said the board has exceeded its authority by establishing separate rules, guidance and standards, conducting investigations, bringing enforcement actions, imposing sanctions, and publishing related information about CFP certificants online.
“No private credentialing organization—other than CFP Board—undertakes or aspires to infringe upon the core regulatory functions of government securities regulators in this manner,” the authors of the white paper alleged.
SIFMA is comprised of hundreds of member firms employing tens of thousands of individuals who hold the CFP private certification. The organization contends that over the past two decades, the CFP Board has continued to expand and grow its own regulatory regime for CFP certificants. The board sets voluntary standards for over 101,000 certified financial planners in the U.S.
SIFMA said that the 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 professionals.
“SIFMA and its members are committed to addressing and ameliorating the significant risks imposed by CFP Board’s regulatory regime,” said SIFMA President and CEO Kenneth E. Bentsen Jr.. “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 organization made a number of recommendations ofnsteps the CFP Board should take, including:
- Eliminate rules and standards that duplicate or conflict with SEC and FINRA rules and standards,
- Implement safeguards around CFP Board document and information requests to CFP Certificants,
- Provide additional notices to the CFP Certificant’s firm regarding CFP Board investigative and enforcement milestones, and other currently unreported events, and
- Give timely notice and copies to the CFP Certificant’s firm of any Firm Materials or Regulatory Materials produced by a CFP Certificant to CFP Board
SIFMA also wants the CFP Board to provide notice and copies of any information requests to a certificants’ firm, not to request or use any firm materials unless the firm gives their consent, and prohibit using any firm materials offered by a certificant in connection with any investigation or enforcement action
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.”
Lewitas Hyman PC represents advisors, brokers and other financial professional in all matters involving the CFP Board, including CFP Board investigations. Headquartered in Chicago, our securities attorneys represent clients nationwide. For more information relating to CFP Board investigations and discipline or other matters, contact Lewitas Hyman at (888) 655-6002 or through our online contact form for a free consultation
