Master Circular for Investment Advisers

SEBI on June 15, 2023 has issued a Master Circular for Investment Advisers. The circular provides following measures to strengthen the conduct of Investment Advisers:

Restriction on free trial

As per the IA Regulations, investment advice can be given after completing risk profiling of the client and ensuring suitability of the product. It has come to the notice of SEBI that IAs are providing advice on free trial basis without considering risk profile of the client. Hence the IAs are directed 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.

Proper risk profiling and consent of client on risk profiling

Risk profiling of the client is essential to provide advice on suitable product based on various criteria like income, age, securities market experience etc. Registered IAs shall provide investment advice only after completing the following steps:

  1. Complete the risk profile of the client based on information provided by the client.
  2. Obtain consent of the client on completed risk profile either through registered email or physical document.

Receiving fees though banking channel only

IAs shall accept fees strictly by account payee crossed cheques / demand draft or by way of direct credit. It is clarified that, IAs shall not accept cash deposits.

Display of complaints status on website

In order to bring more transparency and enable the investors to take informed decision regarding availing of advisory services, IAs shall display the compliant data on the homepage (without scrolling) of their website/mobile app. The information should be displayed properly using font size of 12 or above and made available on monthly basis (within 7 days of end of the previous month).

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