FP Canada Standards Council Discipline Cases
In a 2020 case considered by an FP Canada Hearing Panel, a Certificant processed a $500,000 redemption on the basis of email instructions without taking appropriate steps to verify instructions with the client directly. The instructions did not, in fact, come from the client and were ultimately identified as fraudulent. The Hearing Panel found that Certificant was an experienced and senior financial planner who had the requisite experience to understand his professional obligations. He also had more than one opportunity to recognize the warning signs of fraud (such as transferring a large amount of funds to a third-party account not previously provided by the client), and to subsequently obtain client authorization directly. The Hearing Panel found, amongst other things, that the Certificant demonstrated a failure to act with diligence, failure to place the client’s interests first, and a failure to exercise reasonable prudent professional judgement. Amongst other penalties, the Certificant’s CFP certification was suspended for six (6) months.
In another case considered by an FP Canada Hearing Panel in 2019, a Certificant processed two (2) redemptions based on email instructions alone, contrary to the policies and procedures of the Certificant’s employer. The Certificant falsely represented to their employer that they had spoken with the client over the telephone to confirm the client’s instructions, when they had not done so. Unbeknownst to the Certificant at the time, the emails containing the redemption requests were from a third-party that had gained unlawful access to their client’s email account. The Hearing Panel found that a Certificant failed to act with integrity, diligence and professionalism by processing redemptions based solely on email instructions without verbally confirming the instructions with the client. The Hearing Panel also found that the Certificant failed to put the client’s interests first and failed to act with integrity by making misrepresentations and knowingly provided a false statement to their employer. Amongst other penalties, the Certificant’s CFP certification was suspended for six (6) months.
In another matter, the CRP issued a Letter of Guidance and Advice to a Certificant who processed a fraudulent redemption request without first vocally confirming the request with their client, as required by their firm’s policies. The redemption request directed the funds to be deposited into a new bank account, which was not previously on file. The Certificant also failed to confirm the new banking information verbally with their client. In deciding to close the matter with a letter of Guidance and Advice, the CRP relied on the following mitigating factors: it was an isolated incident; the fraud was difficult to detect; the Certificant did not benefit financially from the incident; the client was made whole and did not blame the Certificant for the fraudulent transaction; the Certificant was remorseful and apologetic for their conduct; and the Certificant implemented measures to avoid similar incidents. In the Letter of Guidance and Advice, the CRP reminded the Certificant of their obligations as a CFP professional, which include the duty of loyalty to the client, acting objectively, acting diligently, maintaining professionalism, providing reasonable and prudent supervision over subordinates, and exercising reasonable and professional judgement.
