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Sebi moots split of IA, distributor roles
Markets watchdog Sebi has proposed a new set of norms for investment advisers, under which they will have to segregate their advisory and product distribution activities, as part of its effort to strengthen the regulatory framework.
New Delhi: Markets watchdog Sebi has proposed a new set of norms for investment advisers, under which they will have to segregate their advisory and product distribution activities, as part of its effort to strengthen the regulatory framework.
Besides, the regulator has suggested that Investment Advisers (IA) should not come out with any investment advice suggesting assured returns to clients in the investment advisory document.
Also, Sebi has suggested mechanisms for charging fees from clients and proposed to raise the net worth requirement for IAs. Further, it has proposed that IA should clearly declare to the client that it will not seek any power of attorney from its clients for auto implementation of investment advice.
The new set of proposals are intended to strengthen the regulatory framework for investment advisers as well as empower them to effectively discharge their responsibilities towards the investors who are their clients, the regulator said in a draft proposal.
Sebi said it has been receiving numerous investor complaints against investment advisers and most of the complaints were related to assured returns being offered by IAs, charging of exorbitant fees from client with a false promises of handsome returns, mis-selling without adhering to the risk profile of the client.
