The CFP Board asked for public comment on a series of proposals aimed at improving its process for evaluating the ethical fitness of CFP® certificants and candidates for CFP® certification.
The proposed changes involve the board’s fitness standards, procedural rules, and sanction guidelines. Input was sought from various stakeholders, including practitioners, candidates, firms, membership organizations and the public, with comments due by the end of April.
Fitness Standards
The CFP Board said it wants to modify its fitness standards so that a candidate with a certain kind of misdemeanor conviction must file a Fitness Petition only when the board’s Enforcement Counsel seeks a public sanction alerting the public to the candidate’s past misconduct.
In conducting that evaluation, counsel would rely on professional judgment, the relevant sanction guidelines, and prior Disciplinary and Ethics Commission (DEC) decisions.
A Fitness Petition involves a more formal process in which the DEC conducts a hearing and issues a written decision, and a vast majority of candidates with these misdemeanor convictions who filed a Petition were granted certification with a private caution.
“Often, conduct requiring a candidate to file a Petition for Fitness (such as misbehavior during college) occurred many years ago or involves an episode of youthful indiscretion unlikely to have a material bearing on their current ethical fitness,” the CFP Board said. “With this change, the DEC, the DEC’s legal counsel and Enforcement Counsel would not need to adjudicate Fitness Petitions where the outcome would be a private caution, lowering the volume of Fitness Petitions to a manageable level and enabling the DEC to focus on matters that involve more egregious conduct.”
Procedural Rules
The CFP Board proposes to modify its procedural rules so that when a candidate has a “Relevant Misdemeanor” and both the candidate and Enforcement Counsel agree that CFP Board should grant the candidate’s Fitness Petition with a Public Notice, Enforcement Counsel would have the discretion to file a joint motion for an order granting the Petition with a Public Notice. In that circumstance, DEC Counsel would grant the motion and the DEC would not hear the Fitness Petition. This language builds upon the approach that CFP Board adopted last year to improve the process for resolving Petitions that involve single bankruptcies and multiple misdemeanor convictions involving a second (or more) alcohol and/or drug-related offense.
New section D in the fitness standards would consolidate all categories of conduct where a candidate may be directed to file a Fitness Petition, depending on Enforcement Counsel’s evaluation. The CFP Board would move to the fitness standards the language in Article 5.5 and 5.6 of the procedural rules that clarifies when a petition is required based on recency of a bankruptcy or multiple alcohol or drug related offenses.
Sanction Guidelines
The sanction guidelines would be changed to clarify that if a CFP® professional engages in misconduct that would bar a candidate from obtaining CFP® certification, then the DEC may not mitigate the sanction. The additions apply to three kinds of misconduct — Lack of Integrity, Forgery Without Authorization and Fraud or Misrepresentation involving Professional Services – for which the sanction guideline is a revocation.
The CFP Board said the proposals in these areas will refine the standards that determine when a Fitness Petition is required, how Petitions are reviewed and how sanctions are applied. All proposed updates are designed to strengthen the efficiency and consistency of CFP Board’s enforcement and certification processes.
“The integrity of CFP® certification is the foundation of CFP Board’s mission, and it depends on fair and transparent standards for candidates and CFP® professionals,” said CEO K. Dane Snowden. “We invite stakeholders to share their perspectives as we work to safeguard consumers and maintain a trusted, clear path to earning and sustaining CFP® certification.”
The board will review all comments on the proposed revisions and determine what changes, if any, to make on its proposals.
Hyman Cotter 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 Hyman Cotter at (833) 665-0784 or through our online contact form for a free consultation.
