Complaints about certified financial planners are on the rise, particularly those made by the public.
Last year, the FP Canada Standards Council received 89 complaints, as detailed in its 2018 annual report released Friday. The number of complaints represents a 17% year-over-year increase from 2017, when there were 76 complaints.
Most of 2018’s complaints were initiated by the council (49 complaints, or 55%), with the top complaint allegation being forgery/falsification (27% of these complaints). The previous year, 47 complaints, or 62%, were initiated by the council.
The public made 21 complaints last year—a 31% year-over-year increase from 2017 when there were 16 such complaints. The top complaint allegation from the public was client service failure (26%).
FP Canada attributes the increase in complaints to greater awareness. “In recent years, the Standards Council has taken steps to raise awareness of the process for submitting a concern about the actions of an FP Canada certificant,” FP Canada said in a release.
Other top complaint categories associated with allegations initiated by both the council and the public included integrity, financial planning advice and suitability.
The report said the council saw an increase in public- and council-initiated complaints about “prudent and appropriate investment recommendations and prudent investment strategies being recommended by FP Canada certificants as part of their financial planning advice.”
Of the 89 complaints, 25 were classified as a presumptive bar to continued certification, which, the report said, “may come to the attention of FP Canada as a result of a self-declaration by an FP Canada certificant (in accordance with the professional obligations to report) or as a staff member proactively identifying a triggering circumstance. FP Canada proactively monitors a number of regulatory feeds.”
Of note, a higher percentage of complaints last year involved certificants who had been certified more than 15 years (52% of complaints in 2018 versus 42% in 2017). However, the report says the percentage was proportionate to the ratio of those who have been certified for that length of time.
The complaints process
Complaints are subject to an initial assessment to determine if the allegations, if shown to be true, demonstrate a potential violation of the FP Canada Standards Council Standards of Professional Responsibility, the release said. Of the 89 complaints received in 2018, 43 were referred to a conduct review panel—an increase of five complaints compared to the previous year.
Conduct review panels are independent and consist of CFP professionals and members of the public, the report said.
Where the conduct review panel determines a possible breach of the standards exists, it may refer the complaint to a disciplinary hearing panel.
In 2018, seven complaints were referred to a hearing panel (compared to 14 in 2017) and 13 disciplinary hearings were held. Disciplinary hearing panels issued suspensions in 50% of the decided matters, and 17% resulted in an individual being banned from seeking renewal or reinstatement of their certification.
Where the conduct review panel determines a remedial approach is appropriate, it may issue a letter of guidance and advice to the certificant, the release said. Last year, letter topics included conflicts of interest, failure to perform due diligence, and inaccurate and misleading product recommendations or advice, the release said.
All disciplinary decisions are published on FP Canada’s website, as are letters of guidance and advice, anonymously.
For full details, including the top Canadian employers of CFP professionals, read the FP Canada Standards Council 2018 annual report.