SEBI has put RIA regulations on the back burner for now.
Ajay Tyagi, Chairman SEBI told Cafemutual on the sidelines of the AMFI Summit held last week that SEBI is yet to take a call on ‘fee vs commission’ issue.
Tyagi said, “The fact that SEBI has issued three paper shows that it is very difficult to come to conclusion or you can say come to a unified view. We are examining this issue. It is certainly an issue and we will sort out that too.”
An AMC official who is also the member of Mutual Fund Advisory Committee (MFAC) told Cafemutual that market regulator has been studying other jurisdictions to analyse the impact of compulsory shift to fee based model. “Given the fact that the issue is complex and investors’ interest is at stake, this is taking a little more time. The market regulator is 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.”
UK’s Retail Distribution Review (RDR) report conducted to review the impact of segregation of advised (commission) and non-advised portfolios (direct). 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.
Last year, SEBI had issued a consultation paper on investment advisors in which it had proposed to segregate fee-based advisors and distributors who receive commission from AMCs.
