SEC decision should pave the way for stronger enforcement actions by CFP Board
Investment advisers and broker dealers who are applying to become certified financial planners or renew their certification now will have to turn over information related to customer complaints.
The Certified Financial Planner Board of Standards Inc. released on Tuesday a recent letter from the SEC giving it permission to obtain background about complaints filed against broker-dealers. Until now, such requests could be refused because doing so would violate an SEC regulation designed to protect customer privacy.
But in March 11 letter to the CFP Board, Joseph Furey, co-acting chief counsel of the SEC's Division of Trading and Markets, said that the agency will not seek enforcement action against broker- dealers who disclose complaint information to the CFP Board.
The organization said that the move will make background checks of CFP candidates more efficient while reducing the number of misconduct investigations that are dismissed due to insufficient evidence.
“We believe this guidance from SEC staff will help candidates become certified more quickly while also resulting in stronger enforcement actions, as now there is no longer a reason for firms to object to sharing customer complaint information with the CFP Board,” CFP Board chief executive Kevin Keller said in a statement.
The CFP Board awards the CFP certificate to individuals who pass an initial exam, undergo a background check and fulfill follow-up requirements. About 62,600 people have earned the mark.
The renewal application for a CFP certificate includes disclosing any investigations or legal proceedings that occurred during the previous two years.
The board has been getting hung up on requests for information related to customer complaints.
“Essentially, the CFP Board is forced to handle requests for background documents on a case-by-case basis, devoting a significant amount of CFP Board staff time to handling these requests,” Michael Shaw, the board's managing director for professional standards and legal, wrote to Mr. Furey in a March 10 letter that was part of a 14-month conversation with agency on the issue.