The Financial Planning Standards Council (FPSC) released its 2017 Enforcement and Disciplinary Review Report April 19, detailing the FPSC’s oversight and enforcement efforts for the year.
As of December 2017, there were 16,518 Certified Financial Planner (CFP) professionals and 1,936 FPSC Level 1 certificants across Canada. In 2017, the FPSC certified 595 new CFP professionals and 738 new Level 1 certificants. When these professionals are found to have breached the FPSC’s Standards of Professional Responsibility, the certification body may also discipline CFP holders. Sanctions can range from a letter of admonishment to suspension or revocation of certification by an FPSC discipline hearing panel.
Conduct Review Panel
“Over the past three years, the FPSC has made significant changes to its complaints, investigation and enforcement processes, including the creation of the Conduct Review Panel, an arm’s length panel tasked with determining the appropriate disposition of complaints in the public interest,” say the report’s authors. “FPSC has (also) made a number of changes to its website, increasing public awareness of the professional standards to which FPSC certificants are held.”
It says this effort is largely responsible for the three-fold increase over 2016 in the number of public complaints the FPSC has received. In 2017, 53 per cent of the public complaints it received were reported to the FPSC alone, while 47 per cent were reported to the FPSC and another regulatory body at the same time.
Total number of complaints
In 2017, the FPSC received 76 complaints in total. Of those, 56 per cent were escalated to an investigation into the certificant’s conduct and 35 per cent were dismissed. Another eight per cent were sent directly to a conduct review panel after an initial review.
When a conduct review panel has concerns about conduct, it may issue a Letter of Guidance and Advice to the professional. When this happens, it will also publish an anonymized version to notify other professionals and the public about the type of conduct that is concerning to the FPSC. In 2017 the conduct review panel issued guidance about conflicts of interest, appropriate due diligence, making adequate inquiries when presented with a power of attorney for property, signature falsification, inaccurate and misleading product recommendations and failure to comply with regulatory rules relating to the use of blank, signed forms. Cases ultimately referred to a hearing panel in 2017 examined the suitability of advice given, conflicts of interest, disclosure, client service failures, forgery and failure to supervise.
Of those cases referred to a conduct review panel, 37 per cent were referred to a hearing panel, 34 per cent were closed and 29 per cent were closed with guidance. Between 2016 and 2017, in cases where a hearing panel issued penalties, 54 per cent had their CFP designation suspended and 28 per cent had their designation revoked; 18 per cent of the time the CFP holder was barred from future recertification or renewal of their designation.