This Rule Interpretation Bulletin provides information about the interpretation and application of the new Rule of Conduct in the FP Canada Standards Council™ Standards of Professional Responsibility that outlines what roles a Certificant cannot accept relating to a client’s estate or property, while providing financial planning advice or services. This new express obligation to avoid such conflicts of interest came into effect on June 1, 2024.
When a Certificant Cannot Provide Financial Planning Advice or Services
A Certificant cannot agree to be a trustee, executor, power of attorney for property or beneficiary while providing financial planning services
CFP® professionals and QAFP® professionals cannot agree to be an estate trustee, executor or a power of attorney for property for an existing financial planning client, nor can they be named as a client’s beneficiary. The reason why taking on any of these roles while providing any financial planning services or advice is prohibited is because it creates an inherent conflict of interest between the Certificant’s own interests and those of their client. In situations where a Certificant ought to have known or could have reasonably discovered their appointment to one of the roles mentioned above, FP Canada will presume that the Certificant did have knowledge.
The only exceptions to this Rule are:
- when the client is an immediate family member (discussed in more detail below); and
- when the Certificant works for a trust company, as trustee or power of attorney for property.
A Certificant must terminate the relationship if they accept one of the above roles
If a Certificant chooses to accept one of the listed roles, and the client is not an immediate family member, then they must advise the client that they cannot continue to provide financial planning services. In short, a Certificant must choose between continuing to provide financial planning advice and services to the client and taking on a new role as an estate trustee, executor or the client’s power of attorney for property.
This notice must be provided to the client in writing. When terminating services, the Certificant must also comply with their other obligations under the Withdrawal of Services Rule, including ensuring that the timing and manner of their withdrawal will not prejudice the client.
If the client is deceased the Certificant cannot accept any of the roles and continue to provide financial planning services to the client’s estate
The Rule also applies if the Certificant is appointed in any of these roles when the client is incapacitated or deceased. If the Certificant chooses to accept the appointment, then they cannot continue to provide financial planning advice or services to the estate.
If the Client is an Immediate Family Member
An exception to the Rule is in situations where a Certificant wishes to act for a member of their immediate family as defined in the Standards of Professional Responsibility.
In situations where the Certificant agrees to act for an immediate family member, they must still meet their obligations under the Conflict of Interest Rule. The Certificant must disclose the conflict of interest created by their role as executor, trustee, power of attorney or beneficiary to their client, in writing, and receive written and informed consent to continue to provide financial planning services to their client, despite the conflict.
Recent Cases
Several cases have recently been considered by a Hearing Panel where a Certificant has been appointed an estate executor/trustee or power of attorney for property, or where the Certificant or their spouse have been named a beneficiary of a client’s will. The conduct occurred in these cases before the new Rule was in effect, however the Hearing Panel found in each case that the Certificant failed to meet their obligations regarding disclosing the conflicts of interest, their duty to place the client’s interest first and to act with fairness. The penalties in these cases included: a letter of admonishment, a ban on certification for 30 months, and a permanent ban from certification with FP Canada.
Professional financial planners can find additional guidance in the Standards of Professional Responsibility to increase their understanding of the Rule.
