CFP Board Compares its Conflicts of Interest Rule to the SEC’s Reg B-I

Posted on August 11th, 2020 at 8:29 AM
CFP Board Compares its Conflicts of Interest Rule to the SEC’s Reg B-I

From the Desk of Jim Eccleston at Eccleston Law LLC:

This is the fourth of several posts discussing the similarities and differences of the SEC’s recently-implemented Regulation Best Interest (“Reg. B-I”) and the CFP Board’s Code of Ethics and Standards of Conduct. In this post, we will look at the requirements regarding conflicts of interest in the CFP Board Code and Reg B-I. 

Both Reg B-I and the CFP Board Code address conflicts of interest. The CFP Board Code requires that all conflicts are disclosed, informed consent is obtained, and the conflict is managed such that it does not influence the financial advice given. The CFP Board Code requires CFP professionals to adopt and follow business practices reasonably designed to prevent conflicts of interest from compromising his or her ability to act in the client’s best interest. 

The SEC’s Reg B-I requires that conflicts be disclosed and that representative-level conflicts be mitigated. Specifically, when making a recommendation, Reg B-I requires that the “broker or dealer establishes, maintains, and enforces written policies and procedures reasonably designed to … identify and mitigate any conflicts of interest associated with such recommendation[.]”  The SEC said that “whether or not a broker-dealer’s policies and procedures are reasonably designed to mitigate such conflicts will be based on whether they are reasonably designed to reduce the incentive for the associated person to make a recommendation that places the associated person’s or firm’s interests ahead of the retail customer’s interest.”

CFP professionals who receive an inquiry or a complaint from the CFP Board should contact the professionals at Eccleston Law for a free consultation.

The attorneys of Eccleston Law LLC represent investors and advisors nationwide in securities and employment matters. The securities lawyers at Eccleston Law also practice a variety of other areas of practice for financial investors and advisors including Securities FraudCompliance ProtectionBreach of Fiduciary DutyFINRA Matters, and much more. Our attorneys draw on a combined experience of nearly 65 years in delivering the highest quality legal services. If you are in need of legal services, contact us to schedule a one-on-one consultation today.

 

Tags: CFP Board, Conflict of Interest, SEC

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