In an effort to reduce confusion among investors dealing with multiple advisors to buy mutual funds, insurance, NPS and so on, RBI committee headed by Dr. Tarun Ramadorai, Professor of Financial Economics, Imperial college London, has proposed bringing uniformity in guidelines for advisors across all financial products.
In other words, the committee wants advisors to offer all the financial products such as insurance, mutual funds, NPS and AIFs with a single license.
Currently, all the financial regulators – SEBI, IRDAI and PFRDA have different rules and regulations for their intermediaries and advisors registered with them. The committee has recommended introduction of an independent body, which can be managed by all these regulators to form a unique guidelines for financial advisors.
In its recommendation, the committee has said, “We propose that regulation should be uniform across advisors, rather than based on the specific sectors or products that advisors sell, so as to enable advice to households about their entire balance sheets.”
The committee has further proposed introduction of Self Regulatory Organisation or SRO to grant license to distributors. It said, “We propose the creation of a unique ‘license number’ for financial advisors to replace the diversity of current registrations such as the ARN, RIA, RA, and EUIN number. An SRO-driven regulatory system for financial advisors across all products will use this unified identification number.”