CFP Board Requests New Comments on Procedural Rules

Highlights of some of the new proposed rules include:

Require periodic status notifications to individuals who file a complaint against a CFP.
Introduce additional procedural steps and explanations regarding bankruptcies of CFPs.
Place the burden of proof on a CFP in circumstances involving multiple allegations of misconduct.

There were several key areas that were addressed in the revised Procedural Rules that contain some new provisions. These include:

One proposed rule was to remove public discipline reports from the CFP Board’s website “after the passage of time, which originally would be between five and 10 years from the date of initial publication ….” Despite receiving comments, the CFP Board decided to delay action on the topic until it has formed a commission later in the year to evaluate and recommend changes to the Board’s “Sanctions Guidelines and Fitness Standards.” Any proposed changes will be reviewed by the Board of Directors and sent out for public comment before finalizing.

Several commenters questioned the proposed rule that requires a respondent to obtain the CFP Board Counsel’s agreement to be able to present a settlement offer to the Disciplinary and Ethics Commission. However, the CFP Board decided to retain the provision because it prevents respondents from “presenting unreasonable offers” that could cause time and resource burdens on the board and DEC.

Some questioned why the CFP Board Counsel should be the authority to determine whether a bankruptcy shows a CFP’s inability to manage the respondent’s financial affairs. However, the CFP Board stated it was committed to a peer review process that calls for the DEC to make those determinations.

One person suggested the Board Counsel be able to open an investigation only when the CFP Board has received a complaint or a disclosure. But the CFP Board Counsel has “always had the authority to investigate a respondent” when it obtains information that warrants an investigation, and this will continue, the CFP Board stated.

The same commenter made two other points: One was concern about a provision that requires CFPs to execute documents that authorize and request third parties to provide information and documents to the CFP Board, which the Board said was addressed elsewhere; and another concern that the CFP make clear an expert witness could attend a hearing when not testifying, which the CFP Board agreed upon.

Another request was that the CFP Board change the rule that provides that a CFP is “bound in a CFP Board proceeding by” a CFP’s Letter of Acceptance, Waiver and Consent (AWC) with the Financial Industry Regulatory Authority. But the CFP Board is retaining that provision.

In addition, a new provision addresses the situation where a respondent has multiple settled customer complaints but does not produce related documents or information requested by CFP Board Counsel. “The provision states that the existence of the settled customer complaints will constitute grounds for sanction unless a respondent proves by a preponderance of the evidence that the allegations of misconduct raised in the settled customer complaints are without merit. A respondent will be permitted to provide oral testimony concerning the allegations raised in the settled customer complaints.”

Finally, another new provision requires the CFP Board Counsel to give regular updates to individuals who file complaints against a respondent, including the every-six-months update on the complaint still being under review or investigation. The CFP Board also will provide a notice that a public sanction has or has not been issued when it is dismissed or finally adjudicated.

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