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The securities market regulator SEBI’s recent consultation paper, open for public comments right now, proposing measures to keep a tab on unregulated investment advisors, differentiating between investment advice and financial product distribution and banning the circulation on investment tips on social media has split the advisory community down the middle. While several independent advisors believe this is a wrong move, the Financial Planning Standards Board India is in favour of the new regulations, it said in a statement on Tuesday.
The Financial Planning Standards Board India has welcomed SEBI’s Consultative Paper on the amendments to the SEBI (Investment Advisers) Regulations, 2013. “Several recommendations by SEBI are indeed laudable and it will go a long way towards streamlining the financial advisory services in the country, thus making it more consumer-centric,” the company said in a press statement.
“Terms such as Financial Planning, Financial Planner etc. are being used in India indiscriminately and that leads to a lot of confusion amongst the consumers. The proposed removal of ‘incidental advice’ by the distributors and other professionals is a welcome step that would protect the investors from getting advice that may not necessarily be in their best interests,” the company said in a statement. “Incidental or limited advice is prone to misuse and has been viewed in the context of the prevalence of mis-selling. Bringing all investment advice, like medical advice, meted out in popular, public and social media needs to be discouraged as this is best left to the experts.”
The Financial Planning Standards Board India (FPSB India) is a Public–Private Enterprise registered under section 25 of the Companies Act, 1956. Functionally, it is a Professional Standards Setting body, a part of leading global confederation that proactively guides the development and promotion of standards for Financial Planning professionals to benefit and protect the public in the country. The certification provided by FPSB India, the Certified Financial Planner certification, covers a broad spectrum of topics ranging from investment, insurance and tax planning to retirement and succession planning of an individual.
In a statement it made on Monday, the United Forum - a forum of several national, local and regional associations of distributors and independent financial advisors (IFAs) - said that the very same proposals could force the individual distributor community as also the banking players to shift out of mutual fund distribution , negatively impacting the sunrise and the growing Rs 16 lacs crore industry. “The role of distributors is very important in educating and penetrating the retail customer base, which needs help guidance and service. Without proper regulatory structure, financial inclusion would be compromised,’’ the statement added.
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