The Securities Industry and Financial Markets Association is accusing the CFP Board of acting as a “de facto, private regulator” for its certificants and is urging the organization to instill a “safe harbor” in its rules for SEC- and FINRA-regulated reps.
In a white paper released today, the broker/dealer trade group argued that the CFP Board, through its disciplinary and sanction guidelines, operates in a way “that is essentially indistinguishable from—but that competes and conflicts with” advisory and b/d regulators by creating its own rules, running its own investigations, and imposing its own sanctions.
“No private credentialing organization—other than CFP Board—undertakes or aspires to infringe upon the core regulatory functions of government securities regulators in this manner,” the authors of SIFMA’s white paper alleged.
SIFMA is not shy about criticizing federal and state regulators, either, but it asserts that the white paper is the group’s latest attempt to counter the CFP Board’s encroachment into the regulatory space.
According to SIFMA, the group has submitted comment letters to the CFP Board since 2007, warning of its “regulatory creep,” to no avail. The white paper details numerous changes at the Board over the years, including revisions to its sanctions guidelines in 2023 to increase the default sanction for some violations while boosting its enforcement program with “numerous, full-time” staff.
SIFMA is particularly worried about the CFP Board’s impact on dually-registered certificants that offer brokerage and advisory products, compared to smaller firms (with the former likely working under more regulation on the federal level). SIFMA asserted that the CFP Board’s demands are “duplicative of SEC and FINRA requirements; moreover, the CFP Board requires any legal or disciplinary issues to be reported faster than regulators do.
The association suggested several recommendations for the CFP Board, including that it created a “safe harbor” in which CFP certificants registered with an SEC-registered investment advisor or FINRA-registered b/d are automatically considered in compliance with CFP rules and standards.
SIFMA also wants the CFP Board to provide notice and copies of any information requests to a certificants’ firm, not to request or use any firm materials unless the firm gives their consent, and prohibit using any firm materials offered by a certificant in connection with any investigation or enforcement action (SIFMA wants the Board to go as far as sanctioning certificants for providing the group materials without the firm’s written consent).
The association also recommended that the CFP Board augment its rules to send a certificant’s firm a pre-publication copy of the public sanctions against that certificant so the firm could review and comment on it (with the CFP Board “reasonably” considering those comments) and also want SIFMA to make it clear that the sanction relates only to a certificant (and not their firm).
In a statement, a CFP Board spokesperson said the Board was reviewing SIFMA's recommendations, and it would consider the group's input as it does with all public comments. Additionally, the Board would welcome "meaningful dialogue" with SIFMA as well as regulators and other stakeholders.
"As an organization committed to competency and ethical standards for financial planners, CFP Board is not a regulator. More than 100,000 CFP® certificants make a voluntary commitment to CFP Board to adhere to our Code of Ethics and Standards of Conduct," the spokesperson said. "Both the public and CFP® professionals expect high standards."
