CFP Board's Procedural Rules and Disciplinary Process

CFP Board enforces its Code of Ethics and Standards of Conduct through the Procedural Rules, which establish a peer-review process that is credible to the public and fair to those whose conduct CFP Board evaluates. Understanding these rules is essential for CFP exam candidates because violations can result in sanctions ranging from private censure to permanent revocation of certification.

Key Enforcement Bodies

CFP Board's enforcement structure includes several key bodies, each with distinct roles:

Enforcement Counsel investigates potential violations of the Code of Ethics and Standards of Conduct, the Pathway to CFP Certification Agreement, and the Terms and Conditions. When sufficient evidence exists, Enforcement Counsel files a formal complaint with the DEC.

The Disciplinary and Ethics Commission (DEC) is a peer-review body composed of CFP professionals and members of the public. The DEC determines whether violations occurred and imposes appropriate discipline. The parties have the right to be represented by counsel of their choice throughout the process.

The 30-Day Self-Reporting Requirement

One of the most important rules for CFP professionals involves mandatory self-reporting. A CFP professional must provide written notice to CFP Board within 30 calendar days of engaging in certain reportable conduct.

Reportable Matters Include:

• Criminal Matters: Being charged with, convicted of, or admitted into a deferred adjudication program for a felony or relevant misdemeanor
• Bankruptcies: Filing or being the subject of a personal bankruptcy, or a business bankruptcy where the CFP professional was a control person
• Tax Liens: Receiving notice of a federal tax lien or failing to satisfy a non-federal tax lien within one year
• Civil Judgments: Failing to satisfy a judgment lien or civil judgment within one year of entry
• Professional Discipline: Any regulatory action, investigation, or professional license revocation or suspension

Relevant Misdemeanor Definition: A criminal offense (not a felony) involving fraud, theft, misrepresentation, dishonest conduct, crimes of moral turpitude, violence, or a second or more alcohol and/or drug-related offense.

Exam Tip: The 30-day reporting requirement is frequently tested. Remember that CFP professionals must report both the initiation and conclusion of reportable matters, including a narrative statement describing the material facts and outcome.

Reporting to Clients: The 90-Day Rule

Beyond reporting to CFP Board, certificants must also inform clients of certain matters:

Clients should be directed to public resources where they can verify a CFP professional's status, including:

• BrokerCheck (FINRA)
• IAPD (SEC Investment Adviser Public Disclosure)
• CFP.net (CFP Board's verification tool)

Investigation and Default Procedures

When CFP Board investigates potential violations, specific timelines apply:

Notice of Investigation (NOI) Response Timeline:

Default Consequences: If a respondent fails to acknowledge receipt of the second Notice of Investigation within 14 calendar days, the respondent is in default. Default can result in an Administrative Order imposing suspension, temporary bar, revocation, or permanent bar without a hearing.

The Hearing Process

When a formal complaint is filed, the respondent has the right to a hearing:

1. Complaint Filing: Enforcement Counsel files a complaint stating grounds for sanction
2. Scheduling Order: DEC Counsel issues deadlines and projected hearing dates
3. Discovery: Parties exchange documents and witness lists
4. Hearing: Parties present evidence, documents, and witnesses
5. Decision: DEC issues a written order with findings and sanctions
6. Appeal: Either party may appeal to the Appeals Commission

The process includes written notice of allegations, the opportunity to present documents and witnesses, and a written order explaining the basis for the decision.

Categories of Sanctions

The DEC may impose sanctions based on the severity of the violation:

Public Disclosure: CFP Board publishes public sanctions through press releases and on its website. The information appears in the "Verify a CFP Professional" and "Find a CFP Professional" databases.

Settlement and Consent Orders

Cases may be resolved through settlement rather than a full hearing:

1. Parties negotiate a proposed consent order with an agreed-upon sanction
2. A three-person settlement review panel (at least two DEC members) reviews the proposal
3. The panel recommends acceptance if terms are clear, reasonable, and serve the public interest
4. The DEC votes on whether to accept the settlement

Sanction Guidelines and Aggravating/Mitigating Factors

CFP Board adopted Sanction Guidelines (revised effective January 1, 2024) to promote consistency in sanctions. The DEC considers:

Aggravating Factors (may increase sanction severity):

• Prior disciplinary history
• Pattern of misconduct
• Harm to clients or the public
• Lack of cooperation with investigation
• Failure to acknowledge wrongdoing

Mitigating Factors (may reduce sanction severity):

• No prior disciplinary history
• Prompt acknowledgment of violation
• Remedial actions taken
• Cooperation with investigation
• Evidence of rehabilitation

The DEC has discretion to aggravate sanctions up to revocation or mitigate down to private censure (or dismiss with caution if the violation does not warrant a sanction).

Recent Enforcement Trends (2024-2025)

As of January 1, 2024, the recommended sanction for failure to timely self-report increased from private censure to public censure. This change reflects CFP Board's emphasis on the importance of self-reporting obligations.

The DEC meets at least six times per year to review cases. Recent public sanctions have included:

• Suspensions of one year and one day
• Revocations for repeated violations
• Denial of reinstatement petitions

Key Procedural Rule Dates Summary