less than 300 investment advisers have taken licence from the capital market regulator Sebi in more than two years to provide advisory services related to dealings in securities.
To safeguard investors' interest, Sebi has made it mandatory for investment advisers, who provide advice related to dealings in securities or investment products, to register themselves and follow its guidelines.
The Securities and Exchange Board of India (Sebi) Investment Advisers Regulations came into force in January 2013. Since then, only 268 investment advisers have been registered with the capital market watchdog, as per the latest figures available on Sebi website.
According to Sebi Chairman U K Sinha, the regulator is ‘very serious’ about these guidelines as these are necessary to safeguard the interest of investors.
“Very few investment advisers have got registered so far, but we are very serious about it and towards the next one year and so, we will have more and more investment advisers who are covered under the regulations,” he said over this weekend.
Furthermore, quoting a survey from the National Council of Applied Economic Research (NCAER), Sinha said 67 per cent investors in the country are following an informal advice system while only one-third are taking formal advice. To change this situation, Sebi came out with Investors Adviser Regulations.
“Somebody who is distributing a financial product, he has a commercial interest. He might recommend a product, where he is likely to get a better commission.
Our guidelines say there has to be an investment adviser who has to be unbiased and should not have any conflict of interest. A distributor can sell his product, but he can not offer advice," Sinha added.