The Securities and Exchange Board of India (SEBI) on May 21, 2024, issued the Master Circular for Investment Advisers.
The following has been stated: -
•SEBI, after considering the inputs from public consultation, reviewed the framework for the regulation of IAs and notified the Securities and Exchange Board of India (Investment Advisers) (Amendment) Regulations, 2020 on July 03, 2020. These amendments came into force on September 30, 2020.
•In accordance with the Securities and Exchange Board of India (Investment Advisers) Regulations, 2013 (‘the IA Regulations’), IAs shall ensure compliance with the following guidelines related to:
(i)Client Level Segregation of Advisory and Distribution Activities
(ii)Agreement between IA and the client
(iii)Fees
(iv)Qualification and certification requirement
•As per the IA Regulations, investment advice can be given after completing risk profiling of the client and ensuring the suitability of the product. It has come to the notice that IAs are providing advice on a free trial basis without considering the risk profile of the client.
•The IAs shall not provide free trial for any products/services to prospective clients. Further, IAs shall not accept part payments (where some part of the fee is paid in advance) for any product/service.
The detailed circular is given in the document below.
[Circular No. SEBI/HO/MIRSD/MIRSD-PoD-1/P/CIR/2024/50]
