Certified Financial Planners in the US can no longer take their issues with the CFP’s board to court: instead, they must go to arbitration.
That is the result of new terms that have been introduced by the board which make it necessary for every CFP holder to waive their rights to take cases to civil courts.
According to a report at Wealthmanagement.com, Leo G Rydzewski, the general counsel for the CFB board, commented that arbitration is potentially “private, quicker and may be less costly than litigation”.
As part of the new system, a CFP holder will have to go through various disciplinary and enforcement reviews before arbitration could occur. Board staff would review any claims of misconduct to determine if there is probable cause and then its ethics and disciplinary commission would carry out a review of the evidence.
The web publication then explains that advisors would have the right to appeal any decision, but as per the new rules there would be mandatory arbitration in any cases in which the CFP holder decided to challenge the committee. Arbitration must then be completed within nine months and if the CFP holder wins the case then the CFP board will cover the costs of arbitration as well as up to $30,000 in attorney fees. In cases where the CFP board wins, arbitration costs are split evenly and each side will pay its own attorney.
The changes were made without consultation with CFP holders and the rules will be in place from May 2.