CFP Board Compares its Standard of Conduct to the SEC’s Reg B-I

Posted on July 23rd, 2020 at 4:06 PM
CFP Board Compares its Standard of Conduct to the SEC’s Reg B-I

From the Desk of Jim Eccleston at Eccleston Law LLC:

This is the first of several posts discussing the similarities and differences of the SEC’s Regulation Best Interest and the CFP Board’s Code of Ethics and Standards of Conduct. 

The U.S. Securities and Exchange Commission (“SEC”) implemented Regulation Best Interest (“Reg. B-I”) on June 30, 2020. Among other things, Reg B-I introduces a new standard of conduct for broker-dealers when working with retail customers.  Reg B-I has been met with mixed reviews, with investor advocates criticizing the regulation for not doing enough to protect investors. 

In an effort to differentiate Reg B-I from its own regulations, the CFP Board published a chart comparing the two standards.  The CFP Board chart began by comparing the standards of conduct of both Reg B-I and the CFP Board’s regulations. The CFP Board noted that while both standards of conduct impose a “best interest” standard, the CFP Board standard explicitly adopted a fiduciary standard, while Reg B-I did not. 

Specifically, the CFP Board standard states that “a CFP professional must act as a fiduciary and, therefore, act in the best interests of the Client.”  The CFP Board standard also states that CFP professionals must fulfill a duty of loyalty, duty of care, and duty to follow client instructions. Meanwhile, Reg B-I requires that a broker-dealer “shall act in the best interest of the retail customer at the time the recommendation is made.”  Reg B-I also requires that a broker-dealer cannot put “the financial or other interests of the broker-dealer ahead of the interest of the retail customer.”

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.

Related Attorneys: James J. Eccleston

Tags: eccleston, eccleston law, james eccleston, cfp board, sec, re bi

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