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Amendments to the Standards of Professional Responsibility
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Financial Planning Standards Council’s Standards Panel has proposed amendments to the Standards of Professional Responsibility for CFP® Professionals and FPSC Level 1® Certificants in Financial Planning. The proposed amendments will continue to advance professional financial planning in Canada.

The consultation period for input on the proposed amendments has now closed. 

The Standards Panel will review the feedback received and consider, as appropriate, further revisions to the Standards of Professional Responsibility based on that input. The new standards will take effect in January 2019.

A full copy of the proposed new Standards of Professional Responsibility is available here.

The chart below summarizes the proposed amendments to the Standards of Professional Responsibility.

New Duty of Loyalty to Replace Client First Principle

Existing Principle 1  
 Existing Principle 1  New Principle 1- Duty of Loyalty
Principle 1: Client First 

A CFP professional shall always place the client’s interests first. Placing the client’s interests first requires the CFP professional to act honestly and to place the client’s interests ahead of his/her own and ahead of all other interests
 The Duty of Loyalty encompasses:

  • The duty to act in the client's interest by placing the client's interests first. Placing the client's interests first requires the Certificant place the client's interests ahead of their own and all other interests;
  • The obligation to disclose conflicts of interest and to mitigate conflicts in the client's favour; and
  • The duty to act with the care, skill and diligence of a prudent professional.

Read more here.

    

 

Revised Disclosure Obligations

 
 Existing Rule 8  New Rule 7

When the services include financial planning or material elements of the financial planning process, a CFP professional shall disclose the following information in writing to the client:

  1. An accurate and understandable description of the compensation arrangements being offered. This description must include information related to costs to the client and the form and source of compensation to the CFP professional and/or the CFP professional’s employer, including any contingency or referral fees. Further, the description must include the terms under which the CFP professional and/or the CFP professional’s employer may receive any other source of compensation and, if so, what the sources of these payments are and what they are based on;
  2. A general summary of potential conflicts of interest between the client and the CFP professional, between the CFP professional’s clients in the case of a joint engagement, the CFP professional’s employer, or any affiliates or third parties, including, but not limited to, information about any familial, contractual or agency relationship of the CFP professional or the CFP professional’s employer that has a potential to materially affect the relationship with the client;
  3. Any information about the CFP professional or the CFP professional’s employer that could reasonably be expected to materially affect the client’s decision to engage the CFP professional;
  4. Any information that the client might reasonably want to know in establishing the scope and nature of the relationship, including, but not limited to, information about the CFP professional’s areas of expertise; and
  5. Contact information for the CFP professional and, if applicable, the CFP professional’s employer.

A Certificant shall disclose the following information to the client in writing, except the disclosure in subsection b) below, which may be made orally:

  1. An accurate and understandable description of the known costs of the services and products, to the client;
  2. When the services include financial planning or elements of the financial planning process, an accurate and understandable description of how the Certificant, the Certificant's firm are compensated for providing the products and services, including contingency and referral fees;
  3. A general summary of potential conflicts of interest between the client and the Certificant, between the Certificant’s clients in the case of a joint engagement, the Certificant’s employer, or any affiliates or third parties, including, but not limited to, information about any familial, contractual or agency relationship of the Certificant or the Certificant’s employer that has a potential to materially affect the relationship with the client;
  4. The specific financial planning services the Certificant will perform for the client;
  5. Any information about the Certificant or the Certificant’s employer that could reasonably be expected to materially affect the client relationship/engagement;
  6. Any information that the client might reasonably want to know in establishing the scope and nature of the relationship, including, but not limited to, information about the Certificant’s areas of expertise; and
  7. Contact information for the Certificant and, if applicable, the Certificant’s employer.

Read more here.

   

 

Existing Principle 1  
 New Rules
(Please Note: The descriptions below are summarized. The full text of the new rule is available in the PDF document.)

Proposed Rule #10. A Certificant shall refrain from personally lending money to a client or personally borrowing money from a client.

Note: The prohibition on lending money to a client and borrowing from a client does not apply where the client is a member of the Certificant’s immediate family.

 Proposed Rule #11. A Certificant shall comply with the established terms of the engagement.
 Proposed Rule #13. A Certificant shall fulfil their professional commitments in a timely and thorough manner.
 Proposed Rule #15. Where a Certificant leaves a firm/employer and that departure has the effect of ending a client relationship, the Certificant shall either:
  • Directly notify the client of the change in relationship where such notice is allowed and is not a breach of a contractual or other obligation the Certificant owes to the firm/employer; or
  • Where the Certificant is not able to notify the client directly, take appropriate steps to ensure the client is notified of the Certificant’s departure from the firm/employer.
 Proposed Rule #16. Where a client ends the engagement, the Certificant shall take reasonable steps to assist the client including, as directed by the client, ensuring a smooth transition to a new financial planner.
 Proposed Rule #20. details a Certificant’s professional obligations to prospective clients including to provide prospective clients with:
  • A description of the services the Certificant will provide; and
  • An accurate and understandable description of: (i) any costs payable by the client; (ii) how the client will pay for the services provided; and (iii) how the Certificant and the Certificant’s firm are compensated for providing the services and associated products.
 Proposed Rule #26. Where a Certificant refers a client to a third party, the Certificant has an obligation to ensure the third party to whom the client is referred, has the appropriate qualifications to provide the services for which the referral is made.
 Proposed Rule #31. A Certificant’s existing professional obligations to FPSC have now been clearly set out in one Rule.

 

In addition to the specific changes highlighted above, the Standards Panel has proposed changes to:

  • The format of the Rules of Conduct to improve the overall flow and readability of the document by grouping like rules together and by inserting headings;
  • Ensure gender neutral language is used throughout the document and the consistent use of “Certificant”; and
  • Revise the definitions in the glossary to ensure consistency with those in the Canadian Financial Planning Definitions Standards and Competencies book and the FPSC Competency Profile (revised in 2017). In addition, the definition of “client” has been amended to capture individual and corporate clients.