Atlanta (April 22, 2003) - While it supports a proposed compliance rule for investment advisers, the Financial Planning Association said that it opposed the creation a self-regulatory organization for the financial planning profession and urged the Securities and Exchange Commission to consider the cost of a voluntary professional regulatory organization instead.
In a comment letter to the SEC, the FPA, which represents 29,000 members of the planning community, said it opposed an SRO and asked the commission to review the costs associated with a voluntary PRO. The proposed rule — Rule 206(4)-7 Internal Compliance Program for Investment Advisers — would require advisers registered with the commission to develop and implement written compliance policies and procedures; to review the program at least annually; and to designate a chief compliance officer responsible for administering the policies and procedures.
"We believe that the PRO concept is worth further consideration," said the FPA in its letter, citing the CFP Board of Standards Inc., as an example of a private-sector model. "FPA remains deeply concerned that the steady consolidation of financial services under one holding company, and the increasing potential for conflicts in cross-selling among affiliated firms through a single point-of-sale agent, merits a re-direction of the SRO question to one with a professional orientation."
However, the FPA said that it would withhold support for the concept if the costs to be regulated by a PRO were "prohibitive" for its licensees. The concept would assume SEC or state oversight of the PRO and allow for optional licensing as a professional planner instead of as an investment adviser, according to the FPA. The FPA also supported a proposed rule to require written supervisory procedures by investment advisers, but questioned related SEC "concept" proposals asking for feedback on third-party compliance reviews and fidelity bonding, noting that the industry was relatively scandal-free and that additional requirements were unnecessary.
-- WebCPA staff
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