CFP Board proposes to lessen stigma for one-time infractions

Potential changes to disciplinary process follow revision of code of ethics, conduct standards

Nov 27, 2018 @ 2:07 pm

By Mark Schoeff Jr.

The Certified Financial Planner Board of Standards Inc. isn't sparing the rod but does want to lessen its sting after a number of years.

The organization that grants the CFP designation released a proposal Tuesday to reform its disciplinary process. One of the recommendations is to remove references to CFP rule violations from its website after five to 10 years if the punishment involves a public letter of admonition or a suspension of one year or less as long as the CFP holder does not commit other infractions.

Another recommendation is to limit the time the CFP Board can launch an investigation to seven years from the time an allegation is made. The proposal also clarifies the review process for appealing a decision of its peer-review Disciplinary and Ethics Commission.

"CFP Board intends for the procedural rules to improve the process that governs those who are subject to CFP Board's enforcement actions," the board said in a statement.

The comment period ends Jan. 29.

In addition, the CFP Board announced an additional set of responses to its frequently asked questions about changes it proposed earlier to its standards of conduct, including strengthening the fiduciary duty attached to the credential.

Some CFPs welcomed revising the disciplinary process to reduce the stigma of punishment.

"If you have made a mistake and you've proven to be an upstanding professional for a significant amount of time thereafter, you should be afforded an opportunity to have a clean record once again," said Douglas Boneparth, president of Bone Fide Wealth and CFP ambassador for New York.

Dennis Nolte, vice president of Seacoast Investment Services, also likes the "forgiveness aspect" of the CFP Board's proposal. Mr. Nolte has experience with lingering disciplinary citations. He has a regulatory notice in his BrokerCheck profile on the Financial Industry Regulatory Authority Inc. website that involves a customer dispute that his firm settled, against his wishes, rather than take to arbitration. He denies wrongdoing and says the matter was dealt with amicably.

He said the CFP proposal to remove disciplinary smudges fits with the redemption trend illustrated by the recent Florida amendment that restores voting rights for felons.

"If it's not a pattern of doing business, the [CFP proposal] allows for more forgiveness than currently exists," Mr. Nolte said. "It doesn't mean that the scarlet letter lasts forever."

In its most recent public release of disciplinary actions, the CFP Board cited seven cases that ranged from public letters of admonition for CFPs who served as beneficiaries and trustees for clients and maintained customer-signed blank switch letters and acknowledgement forms to suspensions for unsuitable annuity recommendations, outside business activities, misrepresentation of continuing education credits and failure to pay taxes. Another CFP had his mark revoked for outside business activities.

Kerrie Debbs, a partner at Main Street Financial Solutions, wants the CFP Board to illuminate disciplinary trends.

"I'd like to see more detail on where the most shortfalls have occurred and whether they're accidental or intentional," Ms. Debbs said.

The CFP Board sets and maintains the educational, experience and ethical standards for the approximately 82,000 CFPs in the United States.

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