Mumbai, November 08, 2016 (GPN) : Financial Planning Standards Board India welcomes SEBIs Consultative Paper on the amendments to the SEBI (Investment Advisers) Regulations, 2013. It has forwarded its suggestions to SEBI on some of the points on the Consultation Paper. Several recommendations by SEBI are indeed laudable and it will go a long way towards streamlining the financial advisory services in the country thus making it more consumer-centric.
SEBIs efforts to bring the Financial Planning services, under any garb, within the purview of the IA Regulations are well appreciated. Terms such as Financial Planning, Financial Planner etc. are being used in India indiscriminately and that leads to a lot of confusion amongst the consumers.
The proposed removal of incidental advice by the distributors and other professionals is a welcome step that would protect the investors from getting advice that may not necessarily be in their best interests. Incidental or limited advice is prone to misuse and has been viewed in the context of the prevalence of mis-selling.
Bringing all investment advice, like medical advice, meted out in popular, public and social media needs to be discouraged as this is best left to the experts. Thus, differentiating between generic comments and specific financial advice requires some clarity. These investment advisory discussions under the ambit of regulations would indeed help towards investor protection.
Commenting on the draft paper, Ranjeet S Mudholkar, Vice Chairman and CEO of FPSB India said, Several of the amendments proposed are commendable and would serve to fast forward the Financial Planning industry, and further help the investor community. At the same time, initiatives towards establishing clarity and initiating steps to enable as well as to facilitate professional growth would be a progressive move.
FPSB India opines that Risk Profiling is an important constituent of Financial Planning and therefore in the Regulations, there is a scope to define the tools and processes for the same to avoid any ambiguities with respect to its fitness and limitations.
There is also an opportunity to establish INVESTMENT ADVISOR CLASS MUTUAL FUNDS, exclusively for the Investment Advisors. This could be permitted by SEBI and mandated especially for complex, volatile, multi-asset hybrid funds. These funds should be designated to be available only through Investment Advisors.
Additionally, there should be a single point Redressal Mechanism for consumer grievances pertaining to financial products and investment advice. The Financial Sector Legislative Reforms Commission has recommended, a single unified Financial Redress Agency would serve any aggrieved consumer, across all sectors. This would feature a low-cost process through which the complaint of the consumer against the financial firm would be heard and remedies awarded. .. This calls for a need for a forum to undertake the same based on the convergence of regulations, which should be established.
In conclusion, SEBIs Draft Paper is a welcome step and with some modifications it would go a long way in changing the way investors could access personal finance advice from those who are competent to offer.
