SEBI ready with SEBI (Investment Advisors) Regulations, 2012
SEBI has taken the first step towards regulating distributors by bringing under its purview “all individuals, body corporate and partnership firms engaged in the business of providing investment advice to investors for consideration, Financial Planners and also any person who holds himself as an investment advisor.”
However, AMFI registered distributors providing investment advice incidental to their primary activity are not going to be affected. This means a majority of IFAs will be out of its purview.
Initially, SEBI will directly register and regulate the investment advisors though it is expected that the self-regulatory organization announced for distributors will take over this role in future. Such investment advisors will not be able to take any other remuneration from anyone else. Any entity which currently offers a mix of both distribution and advisory will have to form a separate entity or division.
The (Investment Advisors) Regulations will prescribe the minimum experience, qualification, certification and net worth/ net assets requirements. It is expected that these investment advisors will be held to higher standards of governance and transparency.
