As a financial advisor or a certified financial planner you must be fair and reasonable in all professional relationships. Disclose and manage conflicts of interest. Fairness requires providing clients what they are due, owed or should expect from a professional relationship, and includes honesty and disclosure of material conflicts of interest.

Outline/Contents:
(1) Introduction
(a) Ethics in financial planning
(b) Ethics: Legal versus moral obligation
(c) Ethics and the Economy
(2) The Concept of Ethics in Islam
(a) Ethics in financial planning
(b) Ethics: Legal versus moral obligation
(c) Ethics and the Economy
(3) Professional Responsibilities in Financial Planning
(4) Code of Ethics for Financial Planners
(a) RFP Code of Ethics, Professional Obligations and Practice Standards
(5) Dealing with Clients’ Complaints
(a) Investigation Committee
(b) Complaints
(c) Investigation
(d) Disciplinary Committee
(e) Proceedings before the National Council
(f) Appeal Committee
(6) Conclusion

Learning Objectives:
Upon completion of this topic/chapter you should have basic knowledge of:
(a) Shariah Concept of Ethics
(b) Professional Duties in Financial Planning
(c) Code of Ethics for Financial Planners
(d) Dealing with Clients’ Complaints

Definitions
Ethics – is based on well-founded standards of right and wrong that prescribe what humans ought to do, usually in terms of rights, obligations, benefits to society, fairness, or specific virtues.
Ibadah – is an Arabic word meaning service or servitude. in Islam, ibadah is usually translated as “worship”, and ibadat — the plural form of ibadah — refers to Islamic jurisprudence (fiqh) of Muslim religious rituals. It is connected with related words such as “Ubudiyyah” (“slavery“), and has connotations of obedience, submission, and humility. The word linguistically means “obedience with submission”
Al–Falah – is the Arabic word for salvation (especially from self-improvement), happiness and well-being. In Islamic contexts, according to the Qur’an, actions such as conforming to Allah’s commands, establishing the Zakat (charity tax), not taking intoxicants and not gambling all lead to falāḥ.
Halal – is an Arabic word that means “permissible or lawful” in English. The word pertains to what Muslims are allowed do to in their lives, especially when it comes to food and drink. The opposite of Halal is Haram which again is an Arabic word for something that’s forbidden.
Khayr (goodness) – means good. Its plural is khayraat (خَيرَات), which means goodness.
Birr (righteousness) – usually translated as “piety” and it appears approximately eight times in the Holy Quran.
Taqwa (piety) – is an Islamic term for being conscious and cognizant of God, of truth, “piety, fear of God.” It is often found in the Quran.
Amānah (Trustworthiness) – Al-Amanah (trusts) and al-mas’uliyyah (responsibilities) refer to the ethical character of the human character that must be practiced in daily life, especially by every Muslim. Both of these noble qualities will help someone avoid something that can cause him to be regarded as a badly-touted individual.

Relaterd terms:
A financial plan – is a written statement of your current financial condition, intended financial state, a timeline for achieving those goals, and the steps you will take to get there.
A financial Advisor/Planner – he/she helps clients (individuals, families, and businesses) create programs to reach their long-term financial goals. They may offer broad financial advice or specialize in an area such as investments, taxes, retirement, or estate planning.
RFP Practice Standards (RPS) – The RPS is intended to provide detailed benchmarks as to the level of professional practice and competence that is expected of a RFP Designee. It deals with the job aspects of financial planning and the financial planner.
RFP (Rectified Financial Planner) – A certified conventional financial planner under Malaysia Financial Planning Council (MFPC).
SRFP (Shariah Rectified Financial Planner) – A certified shariah financial planner under Malaysia Financial Planning Council.

(1)  INTRODUCTION
Wealth management in Islam is a form of ʿibādah to achieve al-Falāḥ or success in this worldly life and the hereafter. Unlike conventional financial planning where the planning horizon ceases at the time of death, the Islamic financial planning horizon is extended not only to this world but also to the hereafter. In Islam, accumulating wealth is not in itself sinful as long as it is done through ḥalāl means. Islam emphasizes that its followers should possess certain qualities by which they are able to administer their wealth efficiently. The Shariah leaves no ambiguity on how wealth should be managed. These qualities should be maintained regardless of whether a person is managing his own wealth or when he is planning for others. Adhering to good ethics and moral behavior helps shape professionalism in financial planning. When one plans for oneself, one should observe ethical behaviour. It is even more so when one is planning for others. In other words, apart from knowing how to become a successful financial planner, keeping to ethics is the indispensable ingredient success in financial planning. It has been proven that knowledge alone is insufficient if it is not put into practice.
We may find, for instance, a financial planner being sued for breaching the trust given or indulging in other unethical practice. It is equally important to stress that bad attitude may have a great impact on a financial planner’s performance as it may result in the client rejecting the planner’s service. A good planner should constantly strive to better himself and maintain his impeccability throughout his career. Since the incidence of breach of ethics in the financial services industry is widespread, a financial planner should be very sound in his knowledge of any conduct or practice that could be interpreted as unethical. In other words, he should be aware of what is ethically permissible. Otherwise, his actions may be considered unethical although they may be ‘lawful’ according to the law of the land and not be indictable in the absence of any admissible evidence.
Honest financial planners can face real dilemmas when trying to do the right thing for their clients. There are some common dilemmas investment professionals may face as well as guidance on how you can overcome them.
This topic/chapter will discuss the characteristics of a financial planner from the Shariah perspective so as to give a clearer picture to those involved in this industry. The discussion will centre on ethics and its relationship to legal obligation. It will also provide the reader with a series of professional code of ethics and the practice of the various professional bodies in Malaysia and their conformity with the Shariah standard of ethics.

Key remarks
(a) Financial advisors manage assets and money matters for individuals who often have less knowledge and understanding of markets and finance in general.
(b) This creates opportunities for bad actors to take advantage of unsuspecting clients, leading to unethical practices.
(c) Some ethical issues revolve around placing clients in suitable investments that may not generate as much income for advisors,
(d) Other unethical practices may be driven by opaque fee structures or inappropriate fee agreements that do not drive benefit for the investor.
(e) Many credentialing bodies and regulatory agencies have imposed ethical codes and compliance standards to help keep advisors above board.

A generation ago, both the tax code and the financial products and services available were simpler than they are today. For example, if someone wanted to buy stock, a stockbroker would place the trade. If someone needed permanent life coverage, a whole life policy was issued.

Today, planners must decide if this traditional approach is better or whether the client would be better off buying any number of the diverse other products available. Likewise, a client who is put into a universal variable life policy may have actually been better off in whole life. The complexity of the financial sector has given individuals greater opportunities to make better decisions. It has also severely increased the risk for misguidance.

The problem extends to investments. Putting clients in suitable portfolios means evaluating and sticking with a client’s risk tolerance and investment time horizon. A 70-year-old client starting out their retirement journey should be advised to invest differently than a 21-year-old trying to build a career and family.

Advisors have the difficult task of balancing their incentives with the needs of their clients. Perhaps there is an S&P 500 index fund that pays a load to brokers to sell it to clients. At the same time, there are several no-load S&P 500 funds as well as low-cost ETFs that will provide the same market exposure for less cost to the client – even if that means the advisor gets paid far less. The client’s needs must be put first.

The modern product maze means that every financial planner faces an ethical dilemma when trying to do the right thing for a client.

(2) THE CONCEPT OF ETHICS IN ISLAM

It is undeniable that the teaching of Islam is concerned with ethics. This is evident from the Prophet’s tradition as he was reported to have said, “I was sent to perfect good conduct”. In many Qur’ānic verses we can find a similar meaning encouraging us to be ethical and to follow good conduct. What is ‘ethics’? It refers to a set of moral principles that distinguishes what is right from wrong. Within the Shariah perspective, the term which is most closely related to ethics in the Qur’ān is khuluq. The concepts of goodness (khayr), righteousness (birr), justice (ʿadl) and piety (taqwā) mentioned in the Qur’ān have a close relationship with ethics.

2(a) Ethics in Financial Planning

Generally speaking, financial planners are supposed to observe good conduct in carrying out their duties. The following are some of the qualities or characteristics a planner should be equipped with in the course of becoming a good Shariah financial planner.

(i) Trustworthiness (Amānah)

The very purpose of the creation of mankind is to fulfill amānah entrusted upon them by Allah. There are many Qur’ānic verses that explained the importance of this concept; “We offered the trust onto the heavens and the earth and the hill, but they shrank from bearing it and were afraid of it. And man assumed it. Lo! He hath proved a tyrant and a fool” (al-Aḥzāb (33): 72) Amānah means that a financial planner should ingrain in himself that what he is doing is considered as amānah and needs to be delivered in the best possible form. It does not mean, however, that no monetary element should be involved when carrying out his duties. Otherwise, no one will take on the responsibility of such a job on the pretext that it is not lawful to charge the clients. From the Shariah point of view, becoming a financial planner falls under the scope of “collective obligation” which means, “if no Muslim is involved in this work all communities are to blame”.

(ii) Righteousness and Making One’s Work Perfect

A financial planner should not only limit himself to performing his professional duties, rather he should also strive to achieve excellence in his work by carrying out duties assigned to him in the best manner. To achieve this, a planner should equip himself with the necessary knowledge and qualification. In this regard the Prophet (s.a.w.) said “Allah, the Exalted is Good and He accepts only what is good”, narrated by Abū Hurayrah.

(iii) Sincerity

This means a financial planner should seek to obey Allah in performing his work. Being sincere, he can avoid influences or pressures and apply himself to his work as a religious commitment as well as a professional duty. However, it does not mean that a planner is prohibited from taking monetary benefit in performing his work as long as it is lawful and according to Shariah principles. Hence, apart from getting worldly benefits and material gains, a planner becomes worthy of reward from Allah the Almighty.

(iv) Allah-Fearing Conduct in Everything

This is the belief that Allah is observing the acts of his servants. Taking this into consideration in desisting from what Allah does not please. This implies that a planner should act in an Allah fearing manner irrespective of what is being practiced by the people around him. In other words, self-monitoring stemming from intrinsic motives may not be effective unless it is tied to both faith and feeling that one is being observed by Allah from whom nothing is concealed. As Allah says, “For verily He knows what is secret and what is yet more hidden” (Ṭā-Hā (20): 7).

(v) Accountability before Allah

A planner should be aware that he will be accountable to Allah on the Day of Judgement. As such, he should take precaution not to get involved in activities that may incur punishment. Allah says in Sūrah al-Zalzalah (99): 6-8, “Then shall anyone who has done an atom’s weight of good, see it. And anyone who has done and atom’s weight of evil shall see it”. In another verse Allah says, “All sufficient is Allah in taking account”, (al-Nisā’ (4): 6). Therefore, a planner should know that he is accountable before Allah, his client and society. He should also hold himself to self-accountability in all his acts.

Caliph ʿUmar said, “Hold yourself to account before you are held to account, for it is easier for you to account and measure your deeds before they are measured for you.” Self-accountability would have no meaning if it is not linked to faith and belief in the hereafter, and accountability is for one’s deeds, reward and punishment.

(vi) Fulfilling Promises

In dealing with clients, a planner will inevitably have to be skillful in meeting the client’s needs. Promises would have been given in order to attract more people to use his service. However, there might be cases where a planner is not able to keep his promise resulting in his image being tarnished; especially, when the promises are broken, intentionally. In fact, the Shariah is very much against not keeping one’s promises and regards it as a sign of hypocrisy. Conversely, the Qur’ān praises those who observe and fulfill their promises and considers such quality as that of a prophet. Therefore, a planner should not make promises to his client which he may not be able to fulfill purely to seek material reward. In short, ethical behavior takes priority over material gains. Allah says in on the obligation of Muslims to fulfill obligations and promises, “O ye who believe, full all obligations” (alMā’idah (5): 1).

2(b) Ethics: Legal versus Moral Obligation

The previously mentioned qualities of a financial planner are mostly self-motivated and driven by the awareness to be an impeccable planner. To have feelings of guilt in the event of not discharging his duties properly, shows that a planner has reached an ethical level that is enough to safeguard him from further wrongdoings such as, overcharging, taking bribes or practicing favoritism. However, there are instances and circumstances in which self-awareness alone is not sufficient to stop unethical practices.

In these cases imposing punishment can be perceived as a deterence to eliminate or at least to reduce malpractices by the planners. Clients or parties involved can take their dissatisfaction to court in the case of unethical practices, provided that the complaints are substantial.

2(c) Ethics and the Economy

Ethics is important for two reasons. Firstly, it defines the rules of acceptable behaviour by which a person should follow in the course of living with others. Hence, ethics set the standards for behaviour in society, without which the society will break down. Being unethical is not acceptable because this will violate the rights and expectations of others in a very fundamental way. In general, people are always fighting for their rights, and in doing so they should understand that rights come together with duties. In other words, although a person is free to exercise his rights, it is his duty to ensure that his rights should not be at the expense of others. Secondly, ethics is what holds the whole business community together. A lack of ethics will lead to moral problems and it can even bring a strong government to its knees. In the financial sector, for instance, we have witnessed numerous crises where investors have withdrawn their funds from countries or regions that they have lost their confidence or trust in.

(3) PROFESSIONAL DUTIES IN FINANCIAL PLANNING

A financial planner guides an individual to make his/her major financial decisions. He helps the individual understand the consequences of each of his/her financial decision. This function is part of function and duties of every person that seeks benefit and welfare to others. It is part of the ethics and value embedded in the Qur’ān.

Allah the Almighty says: “And let there be [arising] from you a nation inviting to [all that is] good, enjoining what is right and forbidding what is wrong, and those will be the successful” (Ali-ʿImrān (3): 104).

A financial planner helps an individual assess his/her financial assets, determine his/her financial goals and consider his/her economic resources to make investment decisions.

The duties of a financial planner include setting financial goals with the client, gathering the client’s financial information, analyzing the information and designing a financial plan for the client. It is a financial planner’s duty to implement the planned financial strategies and monitor the client’s financial decisions.

The above task of the financial planner is driven by the Shariah value and ethics such honesty, transparency and truthfulness to comply with the ḥadīth reported by the Prophet that promote honesty and amānah without any cheating or misconduct.

There is a ḥadīth reported that the Prophet (s.a.w.) said, “Truthfulness leads to righteousness, and righteousness leads to Paradise. A man continued to tell the truth will he becomes a truthful person. Falsehood leads to al fujur (i.e., wickedness, evil-doing), and al fujur (wickedness) leads to the (Hell) Fire, and a man may continue to tell lies till he is written before Allah, a liar”. In regard to honesty, the Prophet (s.a.w.) said: “The merchants will be raised on the Day of Resurrection as evil-doers, except those who fear Allah, are honest and speak truth”.

A financial planner helps the client in risk management by assisting him/her in choosing suitable insurance schemes. He helps plan for the client’s future by providing well-suited investment options. A financial planner helps the client ensure financial independence upon retirement by helping him/her with choosing the proper retirement investment plan. A financial planner will advise the client on how to reduce his/her tax liabilities and enhance cash flow. A financial planner also deals with the conservation and distribution of the client’s financial assets.

This part of consultation, especially when making decision, has been emphasized by Shariah and has been spelled out clearly in the Qur’ān as

Allah the Almighty says: “And those who have responded to their lord and established prayer and whose affair is [determined by] consultation among themselves, and from what We have provided them, they spend” (alShūrā (42): 38).

In terms of job description, a financial planner studies the different aspects of the financial picture of his/her client and provides a suitable financial solution. Some financial planners deal with the various facets of personal finance, while others specialize in fields like risk management or retirement planning. The job of a financial planner can be described by means of a 6step process given by the ISO.

The first step is of setting financial goals with the client. The second step includes the gathering of relevant financial information from the client. The third step is analyzing the gathered information. The fourth is the creation of a financial plan. The last two steps include tasks such as implementing the plan’s strategies and monitoring the implementation of the plan.

(4) CODE OF ETHICS FOR FINANCIAL PLANNERS

(a) RFP Code of Ethics, Professional Obligations and Practice Standards

The RFP Code of Ethics, Professional Obligations and Practice Standards (hereafter called the “Code”) has been embraced by the Malaysian Financial Planning Council (MFPC) to furnish principles, standards and rules to all persons whom it has approved to use any of its professional designations; prior and subsequent designations devised by the Certification and CPD Board (CCB). The CCB will recommend to the MFPC National Council to determine who is recognized and approved to use any of the RFP designations. Implicit to receiving this approval is a commitment on the part of the RFP Designee not only to comply with the decrees and requirements of all relevant laws and regulations in Malaysia, but also to take responsibility to act in an ethical and professionally responsible way in all services and activities in the course of conducting his or her business.

The RFP Code of Ethics, Professional Obligations and Practice Standards embody the following two components:

(i) The Code of Ethics (COE)

The COE provides a reference point for guiding designees on how to behave ethically in the conduct of their business. The COE must be read in conjunction with the RFP Practice Standards.

(ii) The RFP Practice Standards (RPS)

The RPS is intended to provide detailed benchmarks as to the level of professional practice and competence that is expected of a RFP Designee. The RPS must be read in conjunction with the COE and GPP.

The Code of Ethics (COE)

(a) Integrity RFP Designees shall always act in the best interests of the client, the public generally, and shall act with the utmost degree of integrity in all professional engagements. Interpretive Notes: RFP Designees are responsible for behaving in a way that is appropriate professionally when serving their clients, the public at large and the MFPC. As guardians of public trust and confidence, RFP Designees are required to use the uppermost degree of impartiality, integrity, and transparency in all professional dealings.

(b) Transparency RFP Designee shall stay transparent and objective in all dealings and shall explain clearly to clients the rationales where objectivity is compromised due to practical reasons. Interpretive Notes: A RFP Designee should uphold objectivity, honesty and shall disclose all conflicts of interest in the client planner relationship. In instances where commitments to employers or principals make objectivity difficult, the RFP Designee is required to make known this to the client. In the course of performing his professional duties the RFP Designee shall make known to the client whether he/she is independent, representing a principal(s) or employer.

(c) Putting Client’s Interests First

RFP Designee shall put the client’s interests above their own interests at all times. Interpretive Notes: The RFP Designee is required to place the client’s interest above his own in all professional engagement with clients. The RFP Designee agrees to accept the responsibility that in situations where due to prejudicial influences or conflicts of interests that may affect objective judgment, he shall declare such influences or conflicts to clients and take actions that are appropriate in protecting the clients’ interests.

(d) Making the Code of Ethics Available to Clients

A RFP Designees shall, upon request, provide a copy of this Code of Ethics and shall explain to clients the meaning of its provisions. Interpretive Notes: A RFP Designee should make available to the client a copy of the COE and is able to explain how the COE function in the professional relationship and what his/her role and obligations are with respect to the client, his/her principal and the MFPC.

(e) Continuing Professional Development

RFP Designees shall continue to develop themselves professionally and maintain relevancy and competence at a level required to serve clients professionally. Interpretive Notes: A RFP Designee shall continuously acquire maintain and use the standards of knowledge and due care relevant to his/her role as a financial planning professional and to meet guidelines and rules set by the authorities and relevant self-regulatory organizations.

(f) Confidentiality

RFP Designees shall keep all client information confidential according to guidelines, practice standards and laws set by the relevant authorities (e.g. SC, BNM) and Self-Regulatory Organizations (e.g. LIAM, MFPC, NAMLIFA, etc) Interpretive Notes: A RFP Designee shall request all relevant records and documentation as is necessary to satisfy the requirements of the client and the RFP Designee shall respect confidentiality of all information obtained in the performance of his/her professional services unless otherwise required or permitted by law or in the course of a civil dispute.

(g) Professionalism

RFP Designees shall act with professionalism and shall act in a manner that brings honour and dignity to the profession. Interpretive Notes: A RFP Designee shall behave in an honest and courteous manner towards all persons in business relationships and shall enhance the standing of the profession in the community in which he/she serves.

(h) Diligence

RFP Designees shall be diligent in discharging responsibilities to clients and the public and shall render such services promptly, carefully, and thoroughly. Interpretive Notes: A RFP Designee is expected to diligently plan and supervise any professional activity for which he/she is responsible in an adequate and comprehensive manner.

(i) Professional Undertakings

RFP Designees shall only undertake tasks for which they have the proper experience, knowledge, skills, competence and authorization. Interpretive Notes: A RFP Designee shall only undertake business related to his business within the limits of his/her competence and authorization. The RFP Designee must recognize circumstances where knowledge and competence are not sufficient for the task and inform the client of such deficiencies, and where appropriate, recommend to the client professionals who are qualified to complete the task.

(j) Charges, Fees and Costs

RFP Designees shall declare all charges, fees and cost arrangements with clients prior to entering into a contract of engagement.

Interpretive Notes: A RFP Designee shall make known to the client and explain to him the basis of charges, fees and or other remuneration related to services performed on behalf of the client.

The RFP Practice Standards (RPS)

Preamble

The RFP Practice Standards (RPS) is an evolving set of specific professional benchmarks and principles introduced by CCB of the MFPC that are intended to help RFP Designees understand the level of competence and acceptable professional behaviour expected of them in various situations and in dealings with clients and associates. Where there are no clearly defined benchmarks or principles listed in the RPS to measure performance or to guide behaviour in a particular situation or dealing, the designees are to refer to the General Practice Principles for general guidance.

It should be noted that these practice standards and principles provided in the RPS are not meant to be bases for legal liability to be used against a designee who is in violation of these practice standards and principles. Notwithstanding, these practice standards and principles do provide a basis for the Disciplinary Officer of the Ethics and Compliance Board of the MFPC to take disciplinary action against the designee who has brought bad practices and disrepute to the profession.

The RFP Practice Standards (RPS) deals with the job aspects of financial planning and the financial planner. The design of the standards is guided by researches and job analyses made over the years by professional bodies and discussions with financial planning professionals. The RPS provides guidance and benchmarks to financial planning practitioners on how they should perform their job to meet internationally accepted practice standards and to meet clients’ expectations.

Purpose of the RPS

The RFP Practice Standards (RPS) determines the quantity of professional practice that is expected of a RFP Designee who practices financial planning, regardless of his/her job status or work title. All RFP designees are expected to conform to the RPS.

‘Financial Planning’ Defined Under the RPS

The RPS defines financial planning or personal financial planning as “a process or methodology of assisting clients in determining their financial goals, objectives and priorities and the resources to meet them in an optimal and practical manner.” From the definition, it may be deduced that financial planning is a process of doing things and not a product.

The ‘Financial Planning Process’ Under the RPS

The RPS has adopted the established six-step financial planning process fashionable within the financial planning circle. The RPS considers the role of defining and redefining of the client[1]planner relationship as a continuous part of the engagement with the client, which starts from the pre-planning, planning, to the monitoring period. Since, it is an on-going activity that last throughout the relationship after the initial engagement and is interwoven into the fabric of everyone of the six-step financial planning process, the RPS does not list it as one of the six-step process. Instead, separate guidelines are provided under the RPS recommendations to define the activity.

Notwithstanding the above, the RPS does recognize and support any financial planning process that matches its adopted model in serving clients’ needs at the professional level.

Purpose and Format

The RFP Practice Standards (RPS) are represented by a series of RPS Codes, which are ‘Defining Statements’ associated with the continuing professional relationship of the planner with the client and the process of dealings associated with financial planning. To ensure clarity to the purpose and meaning of the statements made, an Interpretive Note is provided to support each Defining Statement. In addition, the intended outcomes for the client, public and the financial planning practitioner of each category of defining statements where the elements are carried out accordingly, are stated to give an indication of their benefits

(5) DEALING WITH CLIENTS’ COMPLAINTS

The Ethics and Compliance Board (hereinafter referred to as “the ECB”) is responsible for the enforcement of the RFP Code of Ethics, Professional Obligations and Practice Standards (hereinafter referred to as the “Code”) which Code was developed by the Certification and CPD Board (hereinafter referred to as “CCB”) of the MFPC and approved by the National Council of the MFPC. The ECB is also responsible for dealing with complaints made against Members including setting the guidelines within which disciplinary proceedings against Members are to be conducted.

The National Council is empowered to take such disciplinary action against any Member, pursuant to inter-alia any regulations made by the National Council from time to time.

Accordingly:-

(1) Guidelines have been set by the ECB, which have been approved by the National Council of the MFPC;

(2) Regulations have been established by the National Council incorporating the above guidelines, for which will be known as the MFPC Disciplinary Proceedings Regulations.

Investigation Committee

An Investigation Committee (IC) shall be formed comprising of at least one (1) member of the ECB and not more than three (3) members of the ECB (the IC) whose function shall be to investigate any complaint concerning a Registered Financial Planner (RFP) and make the determination set out in Regulation 3(f) below;

(i) Subject to sub-regulation (a) above, the composition of the IC including the Chairman of the IC, shall be determined by the Chairman of the ECB. If the IC comprises only one (1) member of the ECB, references in these Regulations to the Chairman of the IC shall be deemed to refer to such single member of the IC;

(b) The term of any member of the IC shall be for a period of two (2) years subject to the power of the Chairman of the ECB to: extend the term for further period(s) of two (2) years each; or remove or release any member of the IC, in such circumstances as the Chairman of the ECB deems fit.

Complaints

(a) Any complaint concerning a RFP designee shall be in writing and shall be made or referred to the ECB;

(b)Any member of the National Council of the MFPC shall be entitled to refer to the ECB of any alleged breach of the Code that comes to his notice or that is brought to his attention. The ECB shall then liaise with any or all relevant persons in order that a complaint complying with the requirements of sub-regulation

(c) below is made to the ECB. The member of the National Council who has so referred any such alleged breach of the Code shall not participate in the disciplinary proceedings against the RFP designee concerned;

(c) A complaint shall contain/be accompanied by the following:

(i). The full name, Identity Card/Passport No. and address of the complainant;

(ii). The facts of the complaint;

(iii). Copies of any document that the complainant proposes to rely on in support of his complaint; and iv. The signature of the complainant.

Investigation

(a) A written complaint in compliance with Regulation 2(c) above shall be forwarded by the ECB to the IC within fourteen (14) days of the receipt of the written complaint;

(b) The IC shall commence its investigation into the complaint and report its findings to the ECB as expeditiously as may be reasonably expected of it but not later than two (2) months after the receipt of the written complaint by the IC or within such further period as the Chairman of the ECB may in writing specify upon an application made by the IC for an extension;

(c) For the purposes of any investigation, the IC may:

(i). require the RFP designee concerned to produce for the inspection by the IC of any document which may relate to or be connected with the subject matter of the investigation and may require the RFP designee involved to give information in relation to any such document;

(ii). Require the RFP designee concerned to give all information which may relate to or be connected with the subject matter of the investigation.

(d) The IC shall refer to the National Council the RFP designee concerned who without lawful excuse refuses or fails to comply with either of the requirements in sub-regulation (c) above whereupon the National Council shall be entitled to:

(i). Suspend the membership of the RFP designee concerned with the MFPC for such period as the National Council deems fit;

(ii). Notify all Members of the MFPC and all relevant regulatory authorities of such suspension. Any such reference to the National Council and/or suspension by the National Council shall not affect the investigation by the IC which shall continue.

(e) Before the IC considers the complaint, the IC shall cause to be posted by prepaid registered post or delivered to the RFP designee concerned at his last known address according to the records of the MFPC:

(i). a copy of the written complaint and all accompanying documents (if any); and

(ii). a notice inviting the RFP designee concerned within fourteen (14) days of the notice or such further period as allowed by the IC, to give to the IC any written explanation he may wish to offer to the IC on the complaint.

(f) The IC shall allow the time specified in the notice referred to in sub-regulation (g) above to elapse and shall give due consideration to any written explanation made by the RFP designee concerned;

(g) The IC shall meet at such place and on such date and at such time as the Chairman of the IC shall determine from time to time in order to consider the complaint and to fulfil its functions in sub-regulation (f) above;

(h) The IC shall prepare a report stating its findings and the determination as reached by it. The report of the IC (together with copies of the complaint, letter of explanation (if any) by the RFP designee concerned and any and all correspondence between the IC and the complainant and/or the RFP designee concerned) shall be forwarded to the Disciplinary Committee.

Disciplinary Committee (DC)

The Disciplinary Committee (DC) shall comprise:

(a) two (2) RFP designees who have been involved in financial planning for not less than five (5) years;

(b) a person with a legal qualification recognized under the Legal Profession Act, 1976; Subject to sub-regulation (a) above, the ECB shall nominate for the consideration of the National Council the persons who are to comprise the DC. The DC shall comprise such nominees who meet with the approval of the National Council;

(c) The term of each member of the DC shall be for a period of two (2) years subject to the power of the National Council to:

(i) Extend the term for further period(s) of two (2) years each;

(ii) remove or release any member of the DC, in such circumstances as the National Council deems fit;

(d) The Chairman of the DC shall be as determined by the President of the National Council from time to time;

(e) The DC shall meet at such place and on such date and at such time as the Chairman of the DC shall determine from time to time; (i) Where the IC has determined that no proper cause for the complaint exists or no cause of sufficient gravity exists; or

(f) Where the complainant has withdrawn the complaint and the IC has referred the matter to the DC with a recommendation that the complaint be considered closed, the DC may concur with the determination or recommendation (as the case may be) of the IC and the complaint shall thereafter be considered closed. However, where the DC disagrees with such determination or recommendation of the IC (as the case may be), the DC shall proceed to hold a formal investigation in relation to the complaint;

(g) Notice of the hearing of the DC shall be sent to the complainant and to the RFP designee concerned by prepaid registered post or delivered to the last known address of the complainant and the RFP designee concerned based on the records of the MFPC. The notice shall specify the date, time and place of the hearing of the DC;

(h) The DC may adjourn the hearing from time to time. No written notice of an adjournment is required to be given to any party when the adjournment is made in the presence of that party;

(i) Where on the date fixed for the hearing and investigation of the complaint, the complainant or the RFP designee concerned or both fail or fails to attend before the DC, the DC may, upon being satisfied that the notice of the hearing has been posted or delivered to the person or persons concerned, proceed to hear and investigate the complaint in the absence of such person or persons without further notice to such person or persons and make its determinations; At any hearing before the DC:

 (i) the RFP designee concerned may cross-examine the complainant and his witnesses, if any, in relation to the complaint;

(ii)the complainant may cross-examine the RFP designee concerned where he gives evidence, and his witnesses, if any.

(j) Where the DC is not unanimous on any question or matter to be determined, the decision of the majority shall be deemed to be the decision of the DC;

(k) After hearing and investigating any matter forwarded to it, the DC shall in its report record its findings in relation to the facts of the case and according to those facts shall determine if the RFP designee concerned is in breach of the Code;

(l) Where the DC determines that the RFP designee concerned is not in breach of the Code, the matter shall then be considered closed;

(m) Where the DC determines that the RFP designee concerned is in breach of the Code, the matter shall then be considered by the National Council;

(n) The report of the DC together with the record of the proceedings shall be sent to the President of the National Council within two (2) months from the receipt by the DC of the report of the IC on the complaint or within such further period as the Chairman of the ECB may in writing specify upon an application made by the DC for an extension;

(o) A copy of the report of the DC together with the record of the proceedings shall be sent to the complainant and the RFP designee concerned by prepaid registered post or delivered to their respective last known addresses based on the records of MFPC.

Proceeding before the National Council

(a) In the event the RFP designee concerned has been determined by the DC to be in breach of the Code, at least seven (7) working days notice shall be given to the RFP designee concerned, the complainant and the Chairman of the DC of the place, date and time of the meeting of the National Council for the consideration of the matter. The place, date and time of the meeting of the National Council shall be as determined by the President of the National Council from time to time;

(b) Where on the date fixed for the proceedings before the National Council, the complainant or the RFP designee concerned or both fail or fails to attend before the National Council, the National Council may, upon being satisfied that the notice of the same has been posted by prepaid registered post or delivered to the person or persons concerned, proceed with the matter;

(c) The National Council may adjourn its proceedings from time to time. No written notice of adjournment is required to be given to any party when the adjournment is made in the presence of that party;

(d) At the proceedings before the National Council, the National Council shall consider the report of the DC and give an opportunity to the RFP designee concerned to raise any matter concerning the report of the DC. However, the RFP designee concerned shall not be allowed to adduce any further evidence or call any witnesses for the purpose of the proceedings before the National Council;

(e) The National Council may invite the Chairman of the DC and the complainant to express their views on the matters as raised by the RFP designee concerned. The National Council may, as it deems fit, require the DC to submit within such time as determined by the National Council a further or supplementary report on such matters and issues that the National Council deems fit for the purpose of the proceedings before the National Council and Regulation 4(e), (g), (h), (i), (j) and (k) shall, to the extent necessary, apply for any hearings before the DC for that purpose;

(i) The National Council shall thereafter determine if it concurs with the determination of the DC;

(ii) If the National Council does not concur with the determination of breach by the DC, the National Council shall rule accordingly and the matter shall then be considered closed;

(iii) If the National Council concurs with the determination of breach by the DC, the National Council shall then hear the plea in mitigation (if any) that the RFP designee concerned chooses to make. Thereafter or soon thereafter as is possible, the National Council may impose any one of the following disciplinary actions:

(iv) reprimand the RFP designee concerned;

(v) impose such fine upon the RFP designee concerned as the National Council deems appropriate to be paid to the MFPC within such time frame as determined by the National Council provided that such fine does not exceed the sum of RM50,000.00. In the event such fine is not paid within such time frame, the RFP designee concerned shall be suspended from membership with the MFPC until such fine is paid;

(vi) suspend the RFP designee concerned from membership with the MFPC for such period as the National Council deems appropriate in the circumstances; or

(vii) order the removal of the name of the RFP designee concerned from the Register of Members.

(f) The complainant and the RFP designee concerned shall be notified of the determination of the National Council and the disciplinary action imposed by the National Council (if any) within fourteen (14) working days of the decision of the National Council in relation to the same by a notice in writing issued by or on behalf of the National Council and sent by prepaid registered post or delivered to their respective last known addresses based on the records of the MFPC;

(g) The National Council may publish or cause the publication in any manner it shall deem appropriate, the name of the RFP designee concerned who has been subject to disciplinary action pursuant to these Regulations including the penalty imposed on him provided that such publication shall not be effected pending the disposal of an appeal made in accordance with Regulation 6 below:

(h) The RFP designee concerned may apply for a stay of the disciplinary action as imposed by the National Council provided that an appeal has been made by the RFP designee concerned in accordance with the requirements of Regulation 6(a) below. The application for stay shall be made to the President of the National Council who shall also determine such an application.

Appeal Committee

(a) The RFP designee concerned may, within a period of fourteen (14) days after been notified of the disciplinary action imposed by the National Council, appeal to the Appeal Committee set up hereunder. The appeal shall be in writing and addressed to the President of the National Council and shall:

(i) state the intention of the RFP designee concerned to appeal against the decision of the National Council and indicating whether the appeal is against the determination of breach of the Code and/or the disciplinary action imposed by the National Council; and

(ii) be accompanied by payment in the sum of RM500.00 to offset the expenses incurred for the purposes of the appeal. This payment shall not be refundable.

(b) An appeal that does not comply with the above requirements shall be incompetent and any determination that the appeal is so incompetent shall be made by the President of the National Council who shall inform the RFP designee concerned of such determination;

(c) The Appeal Committee (the AC) shall be appointed by the National Council from time to time so as to hear any particular appeal as lodged. The AC shall comprise:

(i) a practicing lawyer who is an Advocate & Solicitor of the High Court of Malaya; and

(ii) two (2) persons who are members of bodies (whether statutory, corporate or otherwise) which bodies are involved in or connected with financial planning and/or financial services;

(d) The Chairman of the AC shall be as determined by the National Council;

(e) The AC shall meet at such place and on such date and at such time as the Chairman of the AC shall determine from time to time;

(f) The AC may confirm or reverse the determination made by and/or confirm, reverse or vary the disciplinary action imposed by the National Council;

(g) The AC shall, as soon as practicable after its constitution, give the RFP designee concerned an opportunity to make a written representation within such time as may be stipulated by the AC;

(h) After receiving the written representations of the RFP designee concerned (if any), the AC may invite the President of the National Council and/or the Chairman of the DC to give their respective written comments on the written representations of the RFP designee concerned, with such comments to be given within such time as may be stipulated by the AC;

(i) The AC shall upon receiving the written comments of the President of the National Council and/or the Chairman of DC, give the RFP designee concerned an opportunity to give his written comments on the same within such time as may be stipulated by the AC;

(j) After receiving the written representations of the RFP designee concerned, the written comments of the President of the National Council and/or the Chairman of the DC and the written comments of the RFP designee concerned on the same, or in the event there is a failure to submit to the AC any or all of the written representations/comments referred to above, the AC may proceed to consider the appeal based on:

(i) The report of the DC together with the record of the proceedings before the DC;

(ii) The determination of the NC; and

(iii) The written representations and written comments referred to hereinabove and received by the AC.

In order to avoid any doubt, there shall be no oral hearing before the AC.

Useful links
Ethical Standards You Should Expect From a Financial Advisor
Code of Ethics and Standards of Conduct
Code of Ethics
Ethics and Financial Advice: The Final Frontier.
Ethics and Professional Practice in Financial Planning
The important role of trust in ethics and financial advice
Ethical Issues for Financial Advisors
Unethical financial practices
Ethics in financial planning: Analysis of ombudsman decisions using codes of ethics and fiduciary duty standards