SEBI modifies investment charter for investment advisers

In its latest circular, SEBI has released the updated investment charter for Investment Advisers (IAs). The regulator aims to enhance consumer protection and financial literacy among investors.

Details of business done by the IAs with investors

• To ensure that all advertisements are in adherence to the provisions of the advertisement code for IAs
• IAs cannot discriminate among their clients

Details of services provided to investors

• IAs will disclose any conflict of interest of their investment advisory services with their any other activities to the investors
• IAs will disclose the extent of use of AI tools in providing investment advisory services
• IAs will treat their advisory clients with honesty and integrity
• IAs will make adequate disclosure to the investor about all the material facts like risks, obligations, costs etc. related to the products and services offered by them
• IAs will provide clear guidance and caution notice to clients while providing investment advise for dealing in complex and high-risk financial products and services
• IAs are required to maintain confidentiality of client information unless they have a legal obligation to disclose to provide client data or the client provides specific consent to share his information
• IAs will disclose the timelines of various services offered by them to their clients and adhere to them

Details of grievance redressal mechanism and how to access it

• If an investor approaches an IA with a complaint, the adviser has to redress the complaint within 21 days of receipt
• The investor can also file a complaint against the IA on the SCORES platform to the Investment Adviser Administrative and Supervisory Body (IAASB) on email which will be then reviewed by IAASB and later by SEBI. If the investor is still not satisfied, he has the option to file a complaint on Securities Market Approach for Resolution Through Online Dispute Resolution (SMARTODR) platform for resolution through online conciliation or arbitration

Rights of investors

Investors have the following rights while taking advise from an IA:

• Right to privacy and confidentiality
• Right to transparent practices
• Right to fair and equitable treatment
• Right to adequate information
• Right to initial and continuing disclosure (including right to information about all statutory and regulatory disclosures)
• Right to fair & true advertisement
• Right to awareness about service parameters and turnaround times
• Right to be informed of timelines of each service
• Right to have timely redressal
• Right to suitability of financial products
• Right to exit from a financial product or service in accordance with the agreement with the IA
• Right to receive clear guidance and caution notice while dealing in complex and high-risk financial products and services
• Additional rights to vulnerable customers (like right to get access even if differently abled)
• Right to provide feedback on the financial products and services used
• Right against coercive, unfair and one-sided clauses in financial agreements

Expectations from the investors

Do’s

• Always be aware that you have the right to exit the service of an investment adviser
• Always be aware that you have the right to seek clarifications and clear guidance on advice
• Always be aware that you have the right to provide feedback to the IA on the services provided by him
• Always be aware that you are not bound by any clause in the agreement with the IA which goes against any regulatory provision