Market regulator Sebi has proposed new rules for
investment advisors that will require them to be registered with a self-regulatory organisation (SRO) before undertaking such a role.
The proposed framework intends to regulate investment advisory services in various forms including independent financial advisors, banks, distributors and fund managers.
"While the activity of giving investment advice will be regulated under the proposed framework through an SRO, issues relating to financial products other than securities shall come under the jurisdiction of the respective sectoral regulators such as action for mis-selling, violation of code of conduct, conflict of interest, etc," the Securities and Exchange Board of India (Sebi) said in a concept paper.
Persons or entities seeking registration as investment advisors shall have to obtain it from the SRO.
"The SRO formed to regulate investment advisors will be registered under the Sebi (Self Regulatory Organisation) Regulations, 2004.
"Its duties would include registering and setting 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, etc," Sebi said.
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