For the first time, anyone can read the details behind why the CFP Board is sanctioning one of its advisors, in what the Board’s general counsel calls a “big change” in the type of information it reveals to the public.
Starting today, when the CFP Board announces sanctions against a CFP advisor, it’ll also release the Disciplinary and Ethics Commission order for those sanctions, with greater detail about the circumstances of the allegations, and the commission’s reasoning behind their decision.
The move “enhances transparency and builds trust” in the Board’s decision making, Chair Dan Moisand said in a statement.
“This move aligns with our commitment to elevate the financial planning profession, promoting professional accountability similar to other standards bodies such as medical boards, accountancy boards and attorney disciplinary bodies,” he said.
In 2010, the Board started releasing “anonymous case histories,” with details typically included in a DEC order, including the facts of the case, the discipline suggested and the commission’s reasoning.
But these orders were written to not include the names of the disciplined CFP advisors, nor their firms (in one such history, those being sanctioned were referred to only as the “respondent”).
Though these full orders were anonymous, when the Board previously announced public sanctions via press releases, the names of the CFP advisors involved were revealed, along with a brief paragraph summarizing the case and the DEC’s decision.
The new DEC orders go into far greater detail than those paragraphs, though they will be written in such a way that the advisor's firms and other third parties will not be named (as before, the public can cross-reference these names with other sources such as FINRA’s BrokerCheck search to learn more about the disciplined advisor).
In an interview with WealthManagement.com, CFP Board General Counsel Leo Rydzewski said the revisions to its policies on releasing public sanctions came about as a result of the board’s broader look at its Code of Ethics and Standards of Conduct, including governance reforms and procedural rule updates.
The Board also proposed revisions to its sanction guidelines that would penalize certified advisors for failing to “timely report” potential misconduct. When they were announced, some argued the potential changes were an empty gesture, while others found it a misuse of the Board’s time and resources, considering it lacks the enforcement capabilities of a typical regulator.
The Board’s updates followed Wall Street Journal reporting it failed to vet many advisors' regulatory and criminal history, and that this information wasn’t included on its online search engine.
Rydzewski said the Board determined the public would benefit most from getting access to the DEC orders when sanctions were first announced.
“We concluded it’d be helpful to give the public a better insight into the DEC’s decision,” he said.
Starting Friday, the orders will be linked in press releases naming CFP advisors who’ve been sanctioned, as well as in a “Case Histories” database that will also include the previous anonymous case histories. According to the Board, the public will also be able to view the DEC orders for a particular individual in their profiles on the “Verify a CFP Professional” and “Find Your CFP Professional” databases.
