The CFP Board released its finalized procedural rules on how the board will enforce standards for CFP professionals, a little more than a month before it begins enforcement on its Code of Ethics and Standards of Conduct that was originally passed last year.
The board first proposed a revision of its procedural rules in November 2018, with the revisions undergoing two public comment periods. In the finalized rule, the board underscores that any participants in a CFP Board hearing would be able to do so via videoconferencing, according to Leo Rydzewski, the general counsel for the CFP Board. The rules will codify a change the CFP Board announced this week.
“Where we initially were including language that would allow opportunities for hearings to be done that way [via videoconferencing], we now recognize that we’re doing it and we’re going to continue doing it,” he said. “We supplemented the language to make it clear that individuals could participate in this manner.”
The new rules are replacing the previous Disciplinary Rules and Procedures and Appeal Rules and Procedures into one document, which Rydzewski said would help make the information more accessible for CFP professionals. Rydzewski cited a change in the rules concerning when a CFP professional is undergoing a disciplinary review. If the professional proposes a settlement offer, CFP counsel has to sign off on it for it to be considered. Rydzewski said the change would cut the time the board would need to spend on unreasonable settlement offers.
“Ultimately, whether it’s done by an adjudication hearing or review, it’s the peer-reviewed body that decides. What does change is there are times when a CFP professional offers a settlement offer that clearly will not be accepted by the commission,” Rydzewski said. “Now, when it goes to the commission, it doesn’t mean they’ll always accept the settlement offer...it’s more likely the ultimate decision makers would accept it.”
Additionally, Rydzewski said the board would have an update within the month on recommendations given by a task force created in response to reporting from The Wall Street Journal, which asserted the board failed to vet thousands of CFP professionals' regulatory, disciplinary and criminal history, and failed to include the information on its online search site. The task force was formed in July 2019 and submitted its final report on Nov. 6 of last year (the board offered its own response to the recommendations in December).
In a previous interview with WealthManagement.com, CFP Board Chair Jack Brod said the board had already implemented several recommendations that had been included in the task force’s report.
“There are others that we intend to implement but will take more time to put things in place, and there are ones that will require much more discussion and deliberation which will occur as 2020 unfolds,” he said.
The CFP Board’s Code of Ethics and Standards (along with the new procedural rules) will go into effect on June 30, the same day the SEC implements its own Regulation Best Interest rule.