Certified Financial Planner Board of Standards Forced into Arbitration
The Certified Financial Planner Board of Standards (CFP) is now forcing advisors to settle all disputes with the organization through arbitration, instead of taking the issues to court. According to the board’s new terms, all holders now waive their rights to pursue cases within the civil court system. General counsel for the CFP Board, Leo G. Rydzewski, alleged arbitration is private, faster, and less expensive than litigation, and he said it’s typical that the board directors make changes such as this without taking any feedback from holders.
The new system means arbitration will occur once a CFP holder has gone through the board’s various enforcement and discipline review and appeals procedures. CFP will still review claims of misconduct and make a determination as to whether there is any probably cause, and then the organization’s disciplinary and ethics commission will conduct a peer review of any and all evidence. The advisor is then free to appeal the decision with the board, but must do so through arbitration if the holder decides to challenge and appeal the committee’s final ruling.
There are regulations concerning the arbitration scenarios, too. The process must be completed within nine months and if the panel finds in favor of the holder, the board will need to cover the cost of the arbitration and up to $30,000 of the attorney’s fees. If the CFP board should win the arbitration, the cost associated with the process will be split evenly, and each side will pay for their own attorney.
Arbitration panels will consist of judges with at least five years of experience and proposed by the American Arbitration Association.