Now, SEBI may police financial distributors

Distributors of financial products – or financial advisors as they are called – should prepare for the prying eyes of the Securities and Exchange Board of India, which may bring them under its regulatory supervision.

Distributors of financial products – or financial advisors as they are called – should prepare for the prying eyes of the Securities and Exchange Board of India (SEBI), which may bring them under its regulatory supervision.

HT Image

“The issue of whether the distributors need to be regulated is under consideration and we are looking at this. As and when we finalise on what needs to be done, we will come out with a consultative paper,” SEBI chairman CB Bhave said on Thursday.

Speaking at the launch of joint certification examination for financial advisors conducted by the National Institute of Securities Markets (NISM) and the Financial Planning Corporation (India), he said the examination to test financial planners is only the first process and further training for them was also important.

He asked planners to look into the risk profile of investors.

“We also need to ensure that the financial planner keeps proper documentation and obtain sufficient information about the investor so that we are in a position to check that the advice given by them is feasible,” said Bhave.

Last month, the mutual fund advisory committee set up by SEBI proposed a series of stringent norms and processes along with a documentation of the sales process for mutual funds. It also formed a sub committee to build processes to check mis-selling of products.

Thee NISM plans to build an educational campus at Patalganga near Mumbai at an estimated cost of over Rs 200 crore.

“We are working with MIDC and hope to get possession of the land in the next six months and after that we will look at the development of the campus,” Bhave said.