CFP Code Of Ethics - FP Canada

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CFP Code of EthicsAPRIL 2005TABLE OF CONTENTSPREAMBLE AND APPLICABILITY . . 2COMPOSITION AND SCOPE . . . . . . . 2COMPLIANCE . . . . . . . . . . . . . 2TERMINOLOGY IN THIS CODE . 2PART 1- PRINCIPLES . . . . . . . 3INTRODUCTION . . . . . . 3Principle 1: Integrity . . . . . . . . . 3Principle 2: Objectivity . . . . . . . . . . . . . . 1Principle 3: Competence . . 3Principle 4: Fairness . . . . 4Principle 5: Confidentiality . 4Principle 6: Professionalism . 4Principle 7: Diligence . . . . . . 4PART II - RULES . . . . 4INTRODUCTION . . . . . . . . . 4Principle 1: Integrity . . . . . . . . . 4Principle 2: Objectivity . . . . . . . . . . . SPrinciple 3: Competence . . . . . . . . . . . . . . . . 6Principle 4: Fairness . . . . . . 6Principle 5: Confidentiality . . . . . . . . . . . . . . 7Principle 6: Professionalism . . 7Principle 7: Diligence . . 8A French language version of the CFPTM Code of Ethics is available at: www.cfp-ca. org

PREAMBLE AND APPLICABILITYthey should strive to display in their professionalactivities. As such the Principles are intended tobe a source of guidance for CFP professionals.The comments following each Principle furtherexplain the meaning of the Principle. The Rulesprovide practical guidelines derived from thetenets embodied in the Principles. As such, theRules set forth the standards of ethical andprofessional conduct expected to be followed inparticular situations. This Code does not undertaketo define standards of professional conduct ofCFP professionals for purposes of civil liability.The CFP'" Code of Ethks (the "Code") has beenadopted by Financial Planners Standards Council("FPSC") to provide principles and rules to allpersons whom it has recognized and certifiedto use the "CFP", "Certified Financial Planner"and CFP flame logo trademarks (collectively,the "Marks"). These Marks are owned by theFinancial Planning Standards Board Ltd.("FPSB"), and FPSC is the sole organizationauthorized by FPSB to award them in Canada.FPSC determines who is recognized and certifiedto use these Marks. Implicit in FPSC's acceptanceof this authorization is an obligation not only toensure compliance with the mandates andrequirements of all applicable laws and regulations,but also to require its CFP-designated professionalsto act in an ethical and professionally responsiblemanner becoming of the finandal planningprofession.The Code is structured so that the presentationof the Rules parallels the presentation of thePrinciples. For example, the Rules which relateto Principle 1 (Integrity) are numbered in the100 to 199 series while those Rules relating toPrinciple 2 (Objectivity) are numbered in the200 to 299 series.COMPLIANCEFor purposes of this Code, a person recognizedand certified by FPSC to use the Marks is calleda CFP professional. This Code applies to CFPprofessionals actively involved in the practice offinancial planning, in other areas of financialservices, in industry; in related professions, ingovernment, in education or in any otherprofessional activity in which the Marks areused in the performance of their professionalresponsibilities. In addition, some principles,specifically Principle 1 and Principle 6, alsoapply more generally to the activities of CFPprofessionals even when acting outside the scopeof their capacity as financial planning practitioners.The FPSC Board of Directors requires adherenceto this Code by all those it recognizes and certifiesto use its Marks. Compliance with the Code,individually and by the profession as a whole,depends on each CFP professional's knowledge ofand adherence to the Principles and applicableRules, the influence of fellow professionals andpublic opinion, and disciplinary proceedings,when necessary, involving CFP professionals whofail to comply with the applicable provisions ofthe Code.TERMINOLOGY IN THIS CODE"CFP professional": a person who holds the CFPdesignation from FPSC.COMPOSITION AND SCOPEThe Code consists of two parts: Part 1 - Principlesand Part II - Rules. The Principles are statementsexpressing in general terms the ethical andprofessional ideals of CFP professionals, ideals"Commission": compensation received by anagent or broker calculated as a percentage of thesales or purchase amount.2

PRINCIPLE I: INTEGRITYA CFP professional shall always act with integrity."Conflicts of interest": circumstances, relationshipsor other facts about the CFP professional's ownfinancial, business, property and/or personalinterests that may, as it may appear to a reasonableobserver, impair the CFP professional's abilityto render disinterested advice, recommendationsCFP professionals may be placed by clients inpositions of trust and confidence. The ultimatesource of such public trust is the CFP professional'spersonal integrity: In deciding what is right andjust, a CFP professional should rely on his or herintegrity as the appropriate touchstone. Integritydemands honesty and candor that must not besubordinated to personal gain and advantage.Within the characteristic of integrity, allowancecan be made for legitimate difference of opinion;but integrity cannot co-exist with deceit orsubordination of one's principles. Integrityrequires the CFP professional to observe not onlythe letter but also the spirit of this Code.or services."Contingency fee": a fee determined either as apercentage or otherwise, by reference to the resultsof the Financial Planning rendered."Fee-for-service": a method of compensationwhere a CFP professional is paid directly by theclient and where neither the CFP professional norany related party receives compensation relatedto the purchase or sale of any financial product.A "related party" for this purpose shall mean anindividual or entity from whom any direct orindirect economic benefit is derived by the CFPprofessional as a result of implementing arecommendation made by the CFP professional.PRINCIPLE 2: OBJECTIVITYA CFP professional shall be objective in providingfinancial planning to clients.Objectivity requires intellectual honesty andimpartiality. It is an essential quality for anyprofessional. Regardless of the particular servicerendered or the capacity in which a CFPprofessional functions, a CFP professional shouldprotect the integrity of his or her work, maintainobjectivity, and avoid the subordination of his orher judgment, which would be in violation ofthis Code."Financial Planning": the process of creatingstrategies, considering all relevant aspects of aclient's financial situation, to manage financialaffairs to meet the client's life goals.PART I - PRINCIPLESINTRODUCTIONThese Principles of the Code recognize theindividual CFP professional's responsibilities tothe public, clients, colleagues, employers and tothe profession. They apply to all CFP professionalsin all aspects of their work, and provide specificguidance to them in the performance of financialPRINCIPLE 3: COMPETENCEA CFP professional shall provide services toclients competently and maintain the necessaryknowledge and skill to continue to do so in thoseareas in which the CFP professional is engaged.One is competent only when one has attainedand maintained an adequate level of knowledgeand skill, and applies that knowledge effectivelyin providing services to clients. Competence alsoincludes the wisdom to recognize the limitationsplanning.3

PRINCIPLE 6: PROFESSIONALISMof that knowledge and when consultation or clientreferral is appropriate. A CFP professional, byvirtue of having earned the CFP designation, isdeemed to be qualified to practice financialplanning. However, in addition to assimilating thecore competencies and knowledge required, andacquiring the necessary experience, a CFPprofessional shall make a commitment tocontinuous learning and professional development.A CFP ,professionors conduct in all matters shallreflect credit Uj on the profession.A CFP professional shall behave in a manner thatmaintains the good reputation of the professionand its ability to serve the public interest. A CFPprofessional shall avoid activities that adverselyaffect the quality of his or her financial planningadvice.PRINCIPLE 4: FAIRNESSPRINCIPLE 7: DILIGENCEA CFP professional shall perform financial planningin a manner that is fair and reasonable to clients,principals, partners, and employers and shalldisclose conflicts of interest in ,providing suchservices.A CFP professional shall act diligently in providingfinancial ,planning.Diligence is the provision of services in a promptand thorough manner. Diligence also includesproper planning for and supervision of therendering of professional services.Fairness requires impartiality, intellectual honesty,and disclosure of conflicts of interest. It involves asubordination of one's own feelings, prejudices,and desires so as to achieve a proper balance ofconflicting interests. Fairness is treating others inthe same fashion that one would want to betreated and is an essential trait of any professional.PART 11 - RULESINTRODUCTIONThese Rules provide practical guidelines derivedfrom the tenets embodied in the Principles.As such, the Rules set forth the standards ofethical and professionally responsible conductexpected to be followed in particular situations.PRINCIPLE 5: CONFIDENTIALITYA CFP professional shall maintain confidentiality ofall client information.A client, by seeking the services of a CFPprofessional, expects to develop a relationship ofpersonal trust and confidence. This type ofrelationship must be built upon the understandingthat information supplied to the CFP professionalwill be confidential. In order to provide financialplanning effectively and to protect the client'sprivacy, the CFP professional shall safeguard theconfidentiality of such information.PRINCIPLE I: INTEGRITYA CFP professional shall always act with integrity.Rule 101 - A CFP professional shall not engagein or associate with conduct involving dishonesty,fraud, deceit or misrepresentation, or knowinglymake a false or misleading statement.Rule 102 - A CFP professional has the followingresponsibilities regarding funds and/or otherproperty of clients:a) A CFP professional who takes custody of allor any part of a client's assets for investmentpurposes, shall do so with the care requiredof a fiduciary;4

b) In exercising custody of, or discretionaryauthority ove1 client funds or other property,a CFP professional shall act only inaccordance with the authority set forth inthe governing legal instrument (e.g., specialpower of attorney, trust deed, letterstestamentary, etc.);g) A client's assets in the custody of the CFPprofessional shall be used only for themeans intended.Rule 103 - A CFP professional shall not solicitclients through false or misleading communicationsor advertisements, and for greater certainty:a) a CFP professional shall not make a false ormisleading communication about the size,scope or areas of competence of the CFPprofessional's practice or of any organizationwith which the CFP professional is associated;c) A CFP professional shall identify and keepcomplete records of all funds or otherproperty of a client in the custody, or underthe discretionary authority, of the CFPprofessional;b) a CFP professional shall not make false ormisleading communications to the public orcreate unverifiable expectations regardingmatters relating to financial planning orcompetence of the CFP professional; andd) Upon receiving funds or other property of aclient, a CFP professional shall promptly oras otherwise permitted by law or providedby agreement with the client, deliver to theclient or third party any funds or other-property that the client or third party isentitled to receive and, upon request by theclient or any person duly authorized, rendera full accounting regarding such funds orother property;c) a CFP professional shall not give theimpression that he/she is representing theviews of FPSC or any other group unless theCFP professional has been authorized to do so.PRINCIPLE 2: OBJECTIVITYA CFP professional shall be objective in providingfinancial ,planning to clients.e) A CFP professional shall not commingleclient funds or other property with a CFPprofessional's personal funds and/or otherproperty or the funds and/or other propertyof a CFP professional's firm. Comminglingone or more clients' funds or other propertytogether is permitted, subject to compliancewith applicable legal requirements andprovided accurate records are maintained foreach client's funds or other property;Rule 201 - A CFP professional shall exercisereasonable and prudent professional judgment inproviding financial planning.Rule 202 - A CFP professional shall act in theinterests of the client.f) A CFP professional shall not use, transfer,withdraw or otherwise employ funds orproperty for his or her fees, or for any otherpurpose not provided for in the engagement,except when authorized in writing by theclient; and5

PRINCIPLE 3: COMPETENCEA CFP professional shall provide financial planningto clients competently and maintain the necessarycompetence and knowledge to continue to do soin those areas in which the CFP professional isTo this end, the CFP professional is governedby the accepted sales disclosure guidelinesand regulations covering securities, mutualfwlds, real estate, insurance and otherfinancial products utilized in fulfillingthe plan;engaged.Rule 301 - A CFP professional shall offer adviceonly in those areas in which the CFP professionalis competent to do so. In areas where the CFPprofessional is not sufficiently competent, the CFPprofessional shall seek the counsel of qualifiedindividuals and/ or refer clients to such parties.c) A statement describing material agency oremployment relationships a CFP professional(or his/her firm) has with third parties,including the nature of the compensationarrangements.Rule 302 - A CFP professional shall abstain fromd) A statement identifying any conflicts ofinterest; andintervening in the personal affairs of the client onmatters outside the scope of the engagement.e) The information required by all laws andregulations applicable to the relationship ina manner complying with such.PRINCIPLE 4: FAIRNESSA CFP professional shall perform financialplanning in a manner that is fair and reasonableto clients, principals, partners, and employers, andshall disclose conflicts of interest in providing suchservices.Rule 402 - In rendering services (such as takingan order for securities or insurance coverage) thatdo not encompass financial planning, a CFPprofessional shall inform the client of the scope ofthe services that shall be rendered and that the CFPprofessional is not taking on the responsibilities ofa financial planner. Such understanding obtainedat the start of a relationship need be updated onlywhen the nature of the services to be performedchanges.Rule 401 - A CFP professional shall make timelywritten disclosure of all material informationrelative to the professional relationship. Writtendisclosures that include the following informationare considered to be in compliance with this Rule:a) A statement indicating whether the CFPprofessional's compensation arrangementsinvolve fee-for-service, commission, salary,or any combination of the foregoing. A CFPprofessional shall not hold out as a fee-for service practitioner if the CFP professionalreceives commissions or other forms ofeconomic benefit from parties other thanthe client;Rule 403 - A CFP professional shall inform theclient of changes in circumstances and materialinformation that arise subsequent to the originalengagement that may have an impact on theprofessional relationship or services to be rendered.Such changes include, but are not limited to:a) conflicts of interest;b) the CFP professional's business affiliation;b) Where financial products are used inimplementing the planning strategy, theclient must be informed of the basis uponwhich the CFP professional is compensated.c) compensation structure affecting theprofessional services to be rendered; andd) new or changed agency relationships.6

PRINCIPLE 6: PROFESSIONALISMRule 404 - Where financial planning may becompensated for on a contingency fee basis, sucha fee arrangement must be disclosed in writing toA CFP professional's conduct in all matters shallreflect credit upon the profession.the client.Rule 601 - A CFP professional shall not engage inRule 405 - A CFP professional shall not engage inany conduct that reflects adversely on his or herdiscriminatory practices as defined in applicableintegrity or fitness as a CFP professional, upon thehuman rights legislation.Marks, or upon the profession.Rule 602 - A CFP professional shall use thePRINCIPLE S: CONFIDENTDALITYMarks in compliance with the rules andA CFP professional shall maintain confidentialityof all client information.regulations of FPSC, as established and amendedfrom time to time.Rule 501 - A CFP professional shall not discloseRule 603 - A CFP professional who has knowledgeany confidential client information without thethat another CFP professional has committed aspecific consent of the client unless in responseviolation of this Code, which raises substantialto proper legal or regulatory process. A client'squestions as to the CFP professional's honesty,name shall not be disclosed to another partytrustworthiness or fitness as a CFP professionalunless specific consent has been granted for thein other respects, shall promptly inform FPSC.use of the client as a reference.This rule does not require disclosure ofRule 502 - A CFP professional is bound toinformation or reporting based on knowledgeprofessional secrecy and may not disclosegained as a consultant or expert witness inconfidential information revealed by reason ofanticipation of or related to litigation or otherhis or her position or profession unless requireddispute resolution mechanisms. For purposes ofby law.this rule, knowledge means no substantial doubt.Rule 503 - The use of client information forRule 604 - A CFP professional shall not criticizepersonal benefit is improper, whether or not itanother CFP professional without first submittingactually causes harm to the client.this criticism to the CFP professional forRule 504 - A CFP professional shall maintain theexplanation. Where the criticism may result in asame standards of confidentiality for employers ascomplaint being lodged with FPSC, the CFPfor clients while employed and thereafter.professional must, where required, first submitthat criticism in writing to the other CFPRule 505 - A CFP professional doing businessprofessional for explanation. Notwithstandingas a partner or principal of a financial servicesthis rule, a CFP professional may first submit afirm owes to the CFP professional's partners orcriticism of another CFP professional to FPSC,co-owners a responsibility to act in good faith.This includes, but is not limited to, adherence toshould the matter be considered of such a naturethat prior notice is not appropriate.reasonable expectations of confidentiality bothRule 605 - A CFP professional who has knowledgewhile in business together and thereafter.that raises a substantial question of unprofessional,fraudulent or illegal conduct by a CFP professionalor other financial professional, shall promptly7

inform the appropriate regulatory and/orprofessional disciplinary body. This rule does notrequire disclosure or reporting of informationinformation to FPSC pursuant to Rules 602 or 603or make or threaten to make use of this Code forno substantial purpose other than to harass,gained as a consultant or expert witness inanticipation of, or related to litigation or otherdispute resolution mechanisms. For purposes ofmaliciously injure, embarrass and/or unfairlyburden another CFP professional.this Rule, knowledge means no substantial doubt.PRINCIPLE 7: DILIGENCERule 606 - A CFP professional who has reasonA CFP professional shall act diligently in providingfinancial planning.to suspect illegal conduct within the CFPprofessional's organization shall make timelyRule 701 - A CFP professional shall enter into aclient engagement only after securing sufficientinformation to be satisfied that the relationship isdisclosure of the available evidence to the CFPprofessional's immediate supervisor and/orpartners or co-owners. If the CFP professional iswarranted by the individual's needs and objectives,and that the CFP professional has the ability toconvinced that illegal conduct exists within theCFP professional's organization, and thateither provide the requisite competent services orto involve and supervise other professionals whocan provide such services.appropriate measures are not taken to remedy thesituation, the CFP professional shall, whereRule 702 - A CFP professional shall make and/orappropriate, alert the appropriate regulatoryauthorities including FPSC in a timely manner.implement only those recommendations that aresuitable for the client.Rule 607 - A CFP professional shall performRule 703 - Consistent with the nature and scopefinancial planning in accordance with applicablelaws, rules, regulations and established policies ofgovernmental agencies or other applicableof the engagement, a CFP professional shall carryout a reasonable investigation regarding thefinancial products recommended to clients.Such an investigation may be made by the CFPprofessional or by others provided the CFPauthorities including FPSC.Rule 608 - A CFP professional shall not adoptany method of obtaining or retaining clients thattends to lower the standard of dignity of theprofessional acts reasonably in relying upon suchinvestigation.profession.Rule 704 - Before ceasing to act for a client, aRule 609 - A CFP professional shall not practiceCFP professional shall give the client reasonableadvanced notice of his or her intent and shallany other profession or offer to provide suchadditional services unless the CFP professional isqualified to practice in those fields and is licensedmake sure the withdrawal will not prejudice theclient.or registered as required by law.Rule 705 - A CFP professional shall properlyRule 610 - A CFP professional shall return thesupervise subordinates with regard to theirdelivery of financial planning, and shall notaccept or condone conduct in violation ofthis Code.client's original records in a timely manner aftertheir return has been requested by the client.Rule 611 - A CFP professional shall not bring orthreaten to bring a disciplinary proceeding underthis Code, or report or threaten to report8

"'-ep.Financial Planners Standards CouncilTelephone: 416.593.8587 Toll Free: 1.800.305.9886 Fax: 416.593.6903E-mail: inforrn@cfp-ca.org Website: www.cfp-ca.orgCFP , Cl::RTIFIED FINANCIAL PLANNER and "' are certification marks owned outside the U.S. by Financial Planning Standards Board Ltd. (FPSB),Financial Planners Standards Council is the marks licensing authority for the CFP marks in Canada, through agreement with FPSB.

power of attorney, trust deed, letters testamentary, etc.); c) A CFP professional shall identify and keep complete records of all funds or other property of a client in the custody, or under the discretionary authority, of the CFP professional; d) Upon receiving funds or other property of a client, a CFP professional shall promptly or

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