Sebi norms for investment advisory space

Draft of discussion paper to be out soon

“There are distributors and there are advisers. One is masquerading as the other and the conflict of interest situation is not getting resolved,” Sinha said, while addressing the convocation function of the National Institute of Securities Markets here.

A draft of the discussion paper will be put in public domain soon, he added. “The idea is that the investor should know if he is going to a particular adviser, that person is only working as an adviser. He has no vested interest in selling a particular product,” Sinha said.

Over the past year, there has been a spurt in allegations of mis-selling of investment products by wealth advisers, especially following the discovery of alleged frauds committed by wealth advisers or relationship managers of a couple of foreign banks.

After the recent frauds, a need was felt to restrict such instances. As the activities of such advisers span the jurisdiction of multiple regulators like Sebi, insurance watchdog Irda and the banking regulator RBI, there was also talk of having a separate regulator for the space.

Pension funds regulator PFRDA’s chairman Yogesh Agarwal had also recently mooted the idea of having a “lead regulator” to watch the space.

Meanwhile, Prime Minister’s Economic Advisory Council Chairman C Rangarajan, who was also present at the event, said the government will achieve its target of raising Rs 40,000 crore through the disinvestment process this fiscal.

On fiscal deficit, he said greater focus will be needed to keep it at the targeted 4.3 per cent of the GDP this fiscal. The government needs to be careful on the expenditure front, particularly on the subsidies, Rangarajan said, adding, if the global crude prices continue to remain high, we should increase the domestic fuel prices.

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