SEBI may take some more time to finalize RIA regulations. In fact, the market regulator has been evaluating global practices in the advisory business before finalizing the RIA regulations.
While speaking at the fourth Mint Mutual Fund Conclave held recently in Mumbai, G Mahalingam, Whole Time Member, SEBI said, “There are plenty of questions on fee vs commission. In fact, SEBI had to come out with the consultation paper on RIA regulations twice. Because the subject is complex and investors’ interest is at stake, this is taking a little more time. We are actually studying what is happening in other jurisdictions. UK, for example, has come out with the report on fee vs commission and they have clearly put forth the impact of this shift. We are closely looking at it and seeing what fits best for India.”
Mahalingam was signalling to UK’s Retail Distribution Review (RDR) report conducted to review the impact of segregation of advised (commission) and non-advised portfolios (direct). Cafemutual has a copy of the report.
The report found that the trust and value that advised respondents place in their relationship with a financial adviser suggest that the market for regulated financial advice will remain strong.
The report further said, “There has been a small shift from advised to non-advised channels but a greater move from non-advised to advised channels. However, the advised or non-advised activity could be in relation to a product purchase, consideration or other activity not relating to a new product. Use of advised or non-advised channels in the future is likely to be heavily impacted by the value of the investment, the purpose of the investment and the products likely to be purchased.”
This is in wake of SEBI’s consultation paper on investment advisor in which it has proposed to segregate fee-based advisors and distributors who receive commission from AMCs.
A few days back, the market regulator had reportedly asked CFA Institute India to prepare a report on global trends on advisory business.
