CFP Board preps enforcement update after facing scrutiny

Advisors who violate the CFP Board’s standards of conduct may face stiffer penalties in the future.

The organization unveiled a new committee tasked with reviewing and potentially updating its sanction guidelines and fitness standards. The move underlines the board’s latest efforts to respond to heightened scrutiny and public criticism of perceived shortcomings in its enforcement processes.

The new committee, dubbed the Commission on Sanctions and Fitness, will be “fundamental to CFP Board's ongoing work to strengthen the enforcement processes for our Code of Ethics and Standards of Conduct," CFP Board CEO Kevin Keller said in a statement.

The 15-member group includes CFPs, regulators and executives such as Andrea Seidt, Ohio Securities Commissioner, and Shelly-Ann Eweka, TIAA’s wealth management director. The committee will make recommendations to the CFP Board after receiving feedback from the public and industry. Other members of the group include representatives from the group Better Markets, Charles Schwab and Envestnet, according to the CFP Board.

The board has been restructuring its enforcement process and undertaking changes within its organization following criticism in recent years.

In 2019, a Wall Street Journal investigation revealed that the complete regulatory history of more than 6,300 CFP certificants wasn’t presented on the CFP Board’s website. Later that year, an independent task force made 12 recommendations for the organization to implement, including that its enforcement program was not reasonably designed and didn't adequately ensure reasonable compliance.

The CFP Board has made changes, such as adding BrokerCheck and SEC advisor links to its CFP database. It hired Thomas Sporkin, who had worked in the SEC’s enforcement division for 20 years, as its new head of enforcement at the end of 2020. Since then, it has separated its enforcement division from its adjudication, appeals and arbitration services, according to Keller.

The CFP Board is keen to keep its designation relevant with current members who “don't want to be associated with the bad apples,” Keller told Financial Planning in an interview last week.

It also wants to maintain the trust of the broader public by ensuring brokers and advisors holding its designation comply with its requirements, he said.

“If you don't enforce that code of ethics, then it is meaningless to have a code,” Keller said.

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The board will accept public comment on any revisions before they are adopted, the organization says. Once changes are adopted, the commission will be disbanded.

The new committee will start soliciting input Feb. 18, when the board will host two virtual forums on the matter. A CFP Board spokeswoman said the Board of Directors will likely issue the final version of their Sanctions Guidelines and Fitness Standards in 2022.