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Sebi to tighten regulations for financial advisers

business Updated: Sep 26, 2011 23:41 IST
HT Correspondent
HT Correspondent
Hindustan Times
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In a bid to protect retail investors from mis-selling, the Securities and Exchange Board of India (Sebi) on Monday released a concept paper on regulation of investment advisers, tightening the norms for financial advisers who sell financial products such as mutual funds, insurance policies, pension plans.

The regulator has proposed a self-regulatory organisation (SRO) and all investment advisor must register themselves with the body.

"The persons desirous of registering as investment advisors shall obtain registration with the SRO established for the purpose," said the concept paper. "No person can carry on the activity of offering investment advice unless he is registered as an investment adviser under the regulations."

Retail investors have been complaining to Sebi regarding the mis-selling of financial products by investment advisors.

The market regulator said that investment advisors should receive fees only from investors and not companies. "No financial incentives/consideration would be received from any person other than investors seeking advice," Sebi added.

The SRO's duty would be to set up minimum professional standards, including certification of investment advisors, laying down rules and regulations and enforcing those; informing and educating the investing public; setting up and administering a disputes resolution forum for investors and registered entities.