Even as the market regulator took several key decisions, it once again pressed the pause button on amendments to the Investment Advisers Regulations, 2013. These amendments are aimed at addressing regulatory gaps in standards governing intermediaries/ persons engaged in providing investment advisory services.
SEBI had earlier issued a consultation paper on October 07, 2016, and followed it up with yet another rejigged one on June 22, 2017, to address the issue. According to the board decision of Thursday, to prevent the conflict of interest between advising for investing in financial products and selling of financial products (when done by the same entity), SEBI will now bring out another consultation paper. It will again be thrown open for public for comments before any amendments are made.
The latest consultation paper will seek feedback around the proposal that there should be clear segregation between the two activities, i.e., providing investment advice and distribution of the investment products/ execution of investment transactions provided by an entity. Another proposal that mutual fund distributors while distributing their fund products need to explain the features of products to client, and shall ensure the principle of ‘appropriateness’ of products to the client is also on the cards.
