SEBI Chief U K Sinha expressed his displeasure regarding intermediaries acting as both distributor and advisor by avoiding registering with SEBI. He was speaking at the 11th CII Mutual Fund Summit in Mumbai.
When asked if SEBI would take stricter action against the erring intermediaries, the SEBI chief said, “SEBI’s idea is to create awareness about the requirement of law and create an environment so that the rules are being followed. The whole idea behind SEBI RIA regulation was that we should move towards a system where the customer is paying to advisor for the services being rendered. Many countries have started this practice. The best example is UK or Australia. We have found that there are agencies which are distributing products and are also advising. It may be happening in smaller towns in a bigger manner. This is not acceptable to SEBI in the long run. We would like to wait for some time. If things don’t improve then SEBI will have to take some measures. The SEBI Act is reasonably powerful in this matter to take action.”
Sinha said that SEBI’s team is scrutinizing the situation and will suggest measures if things don’t improve. SEBI has recently cracked down on an Indore based stock broker who had violated SEBI RIA regulations.
Ever since the SEBI RIA rules came into effect in 2013 only 295 entities/individuals have registered themselves as RIAs.
