The Securities and Financial Markets Industry Association is accusing the CFP Board of acting as a “de facto, private regulator” for its certifiers and is asking the organization to create a “safe harbor” in its rules for representatives of regulated by the SEC and FINRA.
In a white paper released today, the broker/dealer trade group argued that the CFP Board, through its disciplinary and sanctioning guidelines, operates in a manner “that is fundamentally indistinguishable from — but competes with and conflicts with” advisory and b/d regulators creating their own rules, conducting their own investigations and imposing their own sanctions.
“No private credentialing organization — other than the CFP Board — undertakes or aspires to encroach on the core regulatory functions of government securities regulators in this way,” the authors of SIFMA White Paper supposed.
CHARACTERISTICS there is no shame criticizing federal and state regulators, but claims the white paper is the group's latest effort to challenge 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 drag,” to no avail. The white paper details numerous changes to the Board over the years, including revisions to its sanctioning guidelines in 2023 to increase the default sanction for some violations, while increasing its enforcement program with “large and timely staff” complete”.
SIFMA is particularly concerned about the impact of the CFP Board on dually registered certifiers who offer brokerage and advisory products, compared to smaller firms (with the former likely to work under more federal regulation). . SIFMA asserted that the CFP Board's requirements are “duplicative of those of the SEC and FINRA; moreover, the CFP Board requires that any legal or disciplinary issues be reported more quickly than regulators do.
The association suggested several recommendations to the CFP Board, including the creation of a “safe harbor” in which CFP certifiers registered with an SEC-registered investment adviser or FINRA-registered b/d are automatically deemed compliant with the rules and standards of CFP.
SIFMA also wants the CFP Board to provide a notice and copy of any information request to a certification firm, not to request or use any hard material unless the firm gives their consent, and to stop using any material of firm provided by a certifier in connection with any investigation or enforcement action (SIFMA wants the Board to go so far as to sanction certificates for securing group materials without the written consent of the firm).
The association also recommended that the CFP Board add to its rules to send a certifier's firm a pre-publication copy of public sanctions against that certifier so that the firm can review and comment on it (with the CFP Board- of “reasonably” taking into account those comments) and also want SIFMA to make it clear that the sanction only concerns one certifier (and not their firm).
In a statement, a CFP Board spokesperson said the Board was reviewing SIFMA's recommendations and would consider the group's input as it does with all public comments. In addition, the Board would welcome “meaningful dialogue” with SIFMA, as well as regulators and other stakeholders.
“As an organization dedicated to competency and ethical standards for financial planners, the CFP Board is not a regulator. More than 100,000 CFP® certifiers make a voluntary commitment to the CFP Board to adhere to our Code of Ethics and Standards of Conduct ,” the spokesman said. . “Both the public and CFP® professionals expect high standards.”