Measures to strengthen the conduct of Investment Advisers (IA)
Summary
This circular mandates that Investment Advisers must not offer free trials or accept part payments for their services. It requires advisers to complete client risk profiling and obtain explicit consent before providing investment advice. Additionally, advisers are restricted to receiving fees via specific banking channels and must display monthly complaint statistics on their websites.
Text
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.
RIAs shall provide investment advice only after completing the following steps: a. Complete the risk profile of the client based on information provided by the client. b. Obtain consent of the client on completed risk profile either through registered email or physical document.
IAs shall accept fees strictly by account payee crossed cheques / demand draft or by way of direct credit into their bank account through NEFT/ RTGS/IMPS/UPI. It is clarified that, IAs shall not accept cash deposits.
IAs shall display the following information on the homepage (without scrolling) of their website/mobile app... made available on monthly basis (within 7 days of end of the previous month): Number of complaints At the beginning of the month, Received during the month, Resolved the during month, Pending at the end of the month, Reasons for pendency.
The measures as referred above shall come into effect from January 01, 2020.
This circular is issued in exercise of the powers conferred under Section 11(1) of the Securities and Exchange Board of India Act, 1992, to protect the interests of investors in securities and to promote the development of and to regulate the securities market.
Source: SecMarx — Measures to strengthen the conduct of Investment Advisers (IA). Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.