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CFP Board Cracks Down on Failure to Report Misconduct

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What You Need to Know

  • CFP Board will now recommend a public censure for CFPs who fail to timely report potential misconduct.
  • CFP Board is still evaluating whether to impose monetary penalties for not reporting misconduct.
  • A plan to create new commission to adjudicate appeal hearings has been issued for public comment.

The Certified Financial Planner Board of Standards said Thursday that it will now recommend a public censure for CFPs who fail to timely report potential misconduct and fail to provide accurate ethics violations to the CFP Board.

The changes were adopted to the Board’s Sanction Guidelines and Procedural Rules.

CFPs are required to report, for instance, a bankruptcy, felony or regulatory action.

CFP Board announced in July that it was proposing to toughen the consequences for CFPs’ failure to timely report potential misconduct and ethical violations — including, for the first time, imposing monetary penalties, akin to a regulator.

However, a CFP Board spokesman told ThinkAdvisor Thursday that CFP Board “is still conducting the evaluation” on whether to impose monetary penalties for not reporting misconduct.

CFP Board “is currently evaluating whether to impose an administrative fee on those who violate these standards to help offset the costs of enforcement,” the spokesman said. “Some commenters support the administrative fee, and some do not.”

The new revisions to the Sanction Guidelines and Procedural Rules:

  • Increase the recommended sanction from a private censure to a public censure for a) failing to timely report (within 30 days) to CFP Board certain categories of information that may reveal misconduct and b) for failing to provide an accurate ethics declaration to CFP Board.
  • Recognize timely reporting on Form U4 (Uniform Application for Securities Industry Registration or Transfer) as equivalent to timely reporting to CFP Board.
  • Stipulate that a CFP professional may accept the public censure for these matters without a hearing and without payment of a hearing fee.

“These changes are the latest developments in CFP Board’s work to strengthen enforcement of the Code of Ethics and Standards of Conduct for CFP professionals,” CFP Board CEO Kevin Keller said in a statement. “Timely and accurate self-reporting to CFP Board helps us maintain effective enforcement processes that are fair to CFP professionals whose conduct is being evaluated and credible to the public.”

New Appeals Commission Plan

CFP Board also announced Thursday that it has issued for public comment a proposal to establish an Appeals Commission to adjudicate appeals.

The deadline to submit comments on the plan is Dec. 14.

Hearings are currently adjudicated by the Board’s Code and Standards Enforcement Committee, which oversees CFP Board’s enforcement processes.

“If the proposed changes are adopted, the new Appeals Commission would have authority to issue CFP Board’s final decision when an individual appeals a final order of the Disciplinary and Ethics Commission (DEC) or an Administrative Order,” CFP Board said.

Pictured: CFP Board CEO Kevin Keller


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