CFP Board's Enforcement Oversight Is Inadequate: Task Force

A task force charged with modernizing the Certified Financial Planner Board of Standards’ enforcement practices has found that “the oversight, operation and structure” of the board’s enforcement program “are not adequate to ensure reasonable compliance by certificants with the CFP Board’s standards of conduct.”

Among the recommendations in the task force’s report:

• The creation of an ongoing enterprise risk management program whose primary focus should be the board’s enforcement program
• A substantial increase in resources devoted to ensuring the enforcement program is reasonably designed to achieve an appropriate level of compliance
• The retention of a “seasoned” director of enforcement with prior supervisory enforcement experience with a financial services regulatory entity
• An annual review of every CFP certificant and deployment of systems that can provide continuous searching of publicly available information about CFP certificants, plus a requirement for CFPs to certify annually that they have no reportable events
• Requirement that certificants report such events to the board within 30 days of occurrence or be subject to “severe public sanctions up to and including revocation”

The task force did not recommend explicitly that the CFP Board publicly disclose certificants’ misconduct on its letsmakeaplan.org website, where consumers can search for a CFP professional.

The CFP Board’s failure to do so was the focus of a Wall Street Journal report in July, which led to the creation of the CFP’s Independent Task Force on Enforcement.

In response to the findings of the task force, the CFP Board noted that it no longer relies primarily on CFP holders to self-disclose regulatory investigations, instances of misconduct or arbitration awards, and it has implemented annual background checks on all CFP designees, including reviews of FINRA’s BrokerCheck and the SEC’s IAPD, which consumers can now access from letsmakeaplan.org and CFP.net/verify.

The CFP also committed to adopting several reforms recommended by the task force. These include hiring individuals with governance experience to evaluate the board’s governance structure; improving the background checks on all CFP professionals, including the review of publicly available information; and an annual “ethics attestation” by CFP professionals.

The CFP Board said it will form a commission in 2020 to review and develop recommendations for revision to its existing Fitness Standards and Sanction Guidance, which will become a part of the commission’s mandate but be subject to public comment before any proposed charges are made.