Investor Charter for Investment Advisers
Summary
SEBI has issued a circular to modify the Investor Charter for Investment Advisers to enhance financial consumer protection and inclusion. The directive mandates that Investment Adviser Administration and Supervisory Bodies advise clients to access the updated charter through various digital and physical channels. Additionally, all Investment Advisers are required to disclose grievance redressal data on their websites by the seventh of the succeeding month. This section outlines investor responsibilities, including due diligence on SEBI-registered Investment Advisers and prohibited actions such as sharing credentials or falling for assured returns. It mandates that investors pay advisory fees through banking channels and insist on written terms and risk profiling before investing. The document concludes with Annexure B, which prescribes specific formats for Investment Advisers to disclose monthly complaint data and disposal trends.
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In a move to enhance financial consumer protection alongside enhanced financial inclusion and financial literacy and in view of the recent developments in the securities market including introduction of Online Dispute Resolution (ODR) platform and SCORES 2.0, it has been decided to modify the investor charter for Investment Advisers.
BSE Limited (presently recognized as IAASB) is directed to advise Investment Advisers to bring the Investor Charter to the notice of their clients (existing as well as new clients) through disclosing the Investor Charter on their respective websites and mobile applications (if any), making them available at prominent places in the office, provide a copy of Investor Charter as a part of client on-boarding process, through e-mails/ letters etc.
all the Investment Advisers shall continue to disclose on their respective websites and mobile applications (if any), the data on complaints received against them or against issues dealt by them and redressal thereof, latest by 7th of succeeding month, as per the format enclosed at Annexure ‘B’ to this circular.
The provisions of this circular shall come into force with immediate effect.
With the issuance of this circular, SEBI, Circular No. SEBI/HO/IMD/IMD-II CIS/P/CIR/2021/0686 dated December 13, 2021 stands rescinded and Clause 8 of Master Circular for Investment Advisers dated May 21, 2024 stands amended as per this circular.
This circular is issued in exercise of powers conferred under Section 11(1) of Chapter IV of the Securities and Exchange Board of India Act, 1992 read with Regulation 15(15) of the SEBI (Investment Advisers) Regulations, 2013 to protect the interests of investors in securities and to promote the development of, and to regulate the securities markets and shall come into effect from the date of this circular.
To enter into an agreement with the client providing all details including fee details, aspects of Conflict of interest disclosure and maintaining confidentiality of information. To do a proper and unbiased risk – profiling and suitability assessment of the client. To conduct audit annually. To disclose the status of complaints on its website. To disclose the name, proprietor name, type of registration, registration number, validity, complete address with telephone numbers and associated SEBI Office details (i.e. Head office/ regional/ local Office) on its website. To employ only qualified and certified employees. To deal with clients only from official number To maintain records of interactions, with all clients including prospective clients (prior to onboarding), where any conversation related to advice has taken place. To ensure that all advertisements are in adherence to the provisions of the Advertisement Code for Investment Advisers Not to discriminate in terms of services provided, among clients opting for same/similar products/services offered by investment adviser.
Onboarding of Clients Sharing of agreement copy Completing KYC of clients Disclosure to Clients To provide full disclosure about its business, affiliations, compensation in the agreement. o To not access client’s accounts or holdings for offering advice. o To disclose the risk profile to the client. o To disclose any conflict of interest of the investment advisory activities with any other activities of the investment adviser. o To disclose the extent of use of Artificial Intelligence tools in providing investment advisory services. To provide investment advice to the client based on the risk-profiling of the clients and suitability of the client. To treat all advisory clients with honesty and integrity. To make adequate disclosure to the investor of all material facts such as risks, obligations, costs, etc. relating to the products or securities advised by the adviser. To provide clear guidance and adequate caution notice to clients when providing investment advice for dealing in complex and high-risk financial products/services. To ensure confidentiality of information shared by clients unless such information is required to be provided in furtherance of discharging legal obligations or a client has provided specific consent to share such information. To disclose the timelines for the various services provided by the investment adviser to clients and ensure adherence to the said timelines.
Investor can lodge complaint/grievance against Investment Adviser in the following ways: In case of any grievance / complaint, an investor may approach the concerned Investment Adviser who shall strive to redress the grievance immediately, but not later than 21 days of the receipt of the grievance. Mode of filing the complaint on SCORES or with Investment Adviser Administration and Supervisory Body (IAASB) i. SCORES 2.0 (a web based centralized grievance redressal system of SEBI for facilitating effective grievance redressal in time-bound manner) (https://scores.sebi.gov.in) Two level review for complaint/grievance against investment adviser: First review done by designated body (IAASB) Second review done by SEBI ii. Email to designated email ID of IAASB
If the Investor is not satisfied with the resolution provided by the Market Participants, then the Investor has the option to file the complaint/ grievance on SMARTODR platform for its resolution through online conciliation or arbitration.
Right to Privacy and Confidentiality Right to Transparent Practices Right to fair and Equitable Treatment Right to Adequate Information Right to Initial and Continuing Disclosure - Right to receive information about all the statutory and regulatory disclosures. Right to Fair & True Advertisement Right to Awareness about Service Parameters and Turnaround Times Right to be informed of the timelines for each service Right to be Heard and Satisfactory Grievance Redressal Right to have timely redressal Right to Suitability of the Financial Products Right to Exit from Financial product or service in accordance with the terms of agreement with the investment adviser Right to receive clear guidance and caution notice when dealing in Complex and High-Risk Financial Products and Services Additional Rights to vulnerable consumers - Right to get access to services in a suitable manner even if differently abled Right to provide feedback on the financial products and services used Right against coercive, unfair, and one-sided clauses in financial agreements
Always deal with SEBI registered Investment Advisers.
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Source: SecMarx — Investor Charter for Investment Advisers. Verbatim text is public record; SecMarx structuring (linkage to applying orders) is cited to us.