Suspensions down, permanent bans up for financial planners in 2021

Suspensions of certified financial planners and qualified associate financial planners were down slightly last year while bans were up, according to FP Canada’s 2021–22 annual report released Thursday.

As part of the report, FP Canada’s enforcement division, the Standards Council, detailed its 2021 enforcement activity.

In investigated cases of misconduct during the year, the top allegation against financial planners was related to putting clients first (about 14% of allegations), followed by integrity and diligence (both about 12%), the Standards Council said.

Among disciplinary hearings, about 45% resulted in suspensions; about 36% in permanent bans or revocations; and about 18% in temporary or permanent bans because of non-cooperation.

The respective figures for 2020 were 50% (suspensions), 0% (revocations) and 0% (non-cooperation). Additional outcomes that year were temporary bans (33%) and letters of reprimand (16%).

In the the latest report, misconduct resulting in suspensions or bans included making unsuitable recommendations, misrepresenting client instructions, and implementing inappropriate strategies for a client’s circumstances.

In “many instances” of hearing panel decisions, the Standards Council said, financial planners were ordered to take continuing education courses in such areas as ethics, financial planning and practice management. In one case, the hearing panel ordered completion of a course on the financial well-being of aging investors at the financial planner’s expense, it said.

The Standards Council also noted that hearing panels consistently deny requests to adjourn a hearing pending the outcome of a related regulatory proceeding.

An FP Canada hearing panel “is an independent body and need not wait for the outcome of other proceedings in order to proceed,” the report said. “The focus of the Standards Council is on whether the [financial planner] breached the FP Canada Standards Council Standards of Professional Responsibility.”

The Standards Council report also highlighted enforcement updates, including the publication on the FP Canada website of statements of allegations regarding misconduct referred to hearing panels, and hearing panel decisions and reasons.

And it noted two tech-related conduct rules that came into effect in July 2021: financial planners must understand the methodologies of the tech tools they use for planning and recommendations as well as validate any data generated, and they must document and communicate to clients the assumptions used and the rationale.

FP Canada reported 1,532 new planner certifications in its 2021–22 report, and noted initiatives such as its strategic plan driven by a vision of financial wellness for all Canadians, new resources for planners, the launch of the QAFP Certification to CFP Certification Bridge Program, and Ontario’s proclamation of title protection for “financial planner.”

“I am glad to report a successful year for FP Canada, with significant progress in several key areas,” said Tashia Batstone, FP Canada’s president and CEO, in a release. “In particular, FP Canada has championed title protection legislation to strengthen consumer protection for many years, and we are very pleased to see it now in place in Ontario, with other provinces working on similar legislation.”

Staff

The staff of Advisor.ca have been covering news for financial advisors since 1998.