• The Standards Council has added two new Rules of Conduct to the Standards of Professional Responsibility.
• The updates also included the addition of a new Practice Standard and comprehensive amendments and updates to all Practice Standards for relevance and clarity.
• The changes are focused on supporting CFP® professionals and QAFP® professionals in protecting vulnerable clients and avoiding conflicts of interest.

TORONTO, May 22, 2024 /CNW/ - The FP Canada Standards Council, a division of FP Canada™, has announced amendments to the FP Canada Standards Council Standards of Professional Responsibility (the "Standards"). The Standards are enforced by the Standards Council and maintained by the Standards Panel, an independent panel made up of Certified Financial Planner® professionals, licensed financial planners from Québec, and members of the public.

The Standards Council recently revised the Standards of Professional Responsibility as part of a continuous effort to ensure CFP professionals and QAFP professionals are held to high standards of competence, professionalism, and ethical conduct. The changes take effect June 1, 2024.

"Financial planning standards must evolve alongside the profession and the needs and expectations of Canadians," says Julie Seberras, CFP, Chair of the Standards Panel. "By reviewing these standards on a regular basis, we ensure that they remain relevant, no matter the landscape in which financial planners and their clients are operating."

New Rules of Conduct and an Additional Practice Standard

The amendments include the addition of two new Rules of Conduct. The first rule relates to the identification and documentation of a Trusted Contact Person. It states that CFP professionals and QAFP professionals must inform their clients about the role of a Trusted Contact Person (TCP) and take reasonable steps to determine whether they would like to name a TCP. These obligations are complimentary to those that planners who are subject to the measures implemented by the Canadian Securities Administrators (CSA) are required to adhere to when opening an account or updating client information. This rule will help ensure that financial planners have an authorized person who they can contact and share personal information with under certain circumstances, such as if they suspect their client is being financially exploited. As such, it protects potentially vulnerable clients.

The second new Rule of Conduct prohibits a CFP professional or QAFP professional from, among other things, acting as an estate trustee or executor, acting as a power of attorney for property, or knowingly being named as a beneficiary for a client while concurrently providing them with financial planning services. There is an exemption where the client is a family member. This rule protects the public by helping financial planners avoid conflicts of interest.

The Standards Panel also introduced a new Practice Standard. The "Monitor and Review" Practice Standard notes that, if the financial planning engagement includes ongoing monitoring, financial planners should engage in regular reviews. Any revised assumptions or recommendations resulting from these reviews should be documented and incorporated in an updated financial plan. This Practice Standard helps ensure that clients' financial plans are aligned with their current goals, needs and priorities.

In addition to the new Practice Standard, each of the existing Practice Standards were updated for relevance and clarity. These changes were made in response to feedback provided through a consultation process with a working group formed by the Standards Panel, which is detailed below.

"Further strengthening the Standards of Professional Responsibility helps the Standards Council ensure the Standards reflect current practice expectations and meet the expectations of Canadians," says Damienne Lebrun-Reid, Vice President Standards, Certification, and Enforcement at FP Canada and Head of the FP Canada Standards Council. "The updated Rules of Conduct and Practice Standards support CFP professionals and QAFP professionals in providing financial planning services and are in the public interest, with amendments focused on protecting vulnerable clients, and ensuring planners are mitigating and avoiding conflicts of interest."

CFP professionals and QAFP professionals are encouraged to review the updated Practice Standards and Rules of Conduct carefully to ensure they understand their professional obligations.

Support for the Amendments

A recent survey carried out by the Standards Panel provided insights into how financial planners view the revisions to the Standards of Professional Responsibility. The consultation resulted in responses from just over 1,000 planners certified by FP Canada. The panel also carried out a similar survey of key industry stakeholders.

The survey found that, regarding the first new Rule of Conduct (about Trusted Contact Persons), 84% of respondents either agree or strongly agree that it is both relevant to practice and in the public interest. In the stakeholder survey, 100% of respondents believe it was in the public interest.

With regard to the second rule (related to certain types of potential conflicts of interest) 92% of financial planners said it was relevant to the practice of financial planning. Likewise, 87% believed it was in the public interest. Once again, 100% of stakeholder respondents believed the rule was in the public interest.

The Standards Panel also formed a working group to provide recommendations regarding the need to update the Practice Standards and provide additional guidance to financial planners. The working group released two surveys: the first elicited responses from 885 financial planners, while the second was focused on industry compliance representatives. These surveys shaped the changes to the Practice Standards.

About FP Canada

Established in 1995, FP Canada is a national not-for-profit education, certification and professional oversight organization working in the public interest. FP Canada is dedicated to championing better financial wellness for all Canadians by leading the advancement of professional financial planning in Canada.  

About the FP Canada Standards Council

A division of FP Canada, the FP Canada Standards Council establishes and enforces financial planning standards, sets the certification requirements for professional financial planners and develops and delivers certification examinations. The FP Canada Standards Council ensures FP Canada certificants ― Certified Financial Planner professionals and Qualified Associate Financial Planner professionals ― meet appropriate standards of competence and professionalism through rigorous requirements of education, examination, experience, and ethics.

SOURCE FP Canada