On June 27, 2025, the Securities and Exchange Board of India (SEBI) issued a comprehensive Master Circular for Investment Advisers—a landmark update aimed at strengthening transparency, investor protection, and professional standards across the advisory ecosystem. This circular consolidates and reinforces key regulatory expectations under the SEBI (Investment Advisers) Regulations, 2013, while introducing some fresh obligations.
✅ 1. Adoption of a Revised Investor Charter
The circular underscores SEBI’s renewed emphasis on client-centricity. Building upon the Investor Charter enhancements introduced in June 2025, the Master Circular mandates Investment Advisers (IAs) to prominently display the Charter on their websites, mobile apps, and client-facing spaces. IAs are also required to publish monthly grievance redressal data (complaints received and resolved) by the 7th of each succeeding month—improving transparency and accountability.
To enhance oversight, IAs must:
Appoint a compliance officer (or certified independent professional) to monitor adherence to regulations.
Submit annual compliance audits, including adverse findings and corrective measures, within specified timelines.
Maintain a functional website detailing regulatory compliance—aligning with Regulation 19A of IA Regulations.
🧭 3. Client Agreements, Risk Profiling & Suitability Standards
The circular reiterates essential responsibilities for IAs:
Establish detailed agreements with clients covering fees, conflicts, confidentiality, and service scope.
Conduct risk profiling and suitability assessments before issuing advice, with documented client consent.
Ensure that recommendations adhere to suitability standards and are consistent with client risk profiles.
💰 4. Fee Collection & Prohibitions on Advance Payments
SEBI revisited the guidelines on advance fees in April 2025, allowing IAs to collect fees in advance for up to one year provided clients agree. The Master Circular integrates these provisions, stressing transparent disclosure of fee terms and banking channel-only fee collection—cash or part-payments are strictly prohibited.
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🚫 5. Ban on Free Trials & Part-Payments
To preserve professional accountability, the Master Circular explicitly prohibits:
Offering free trials of advisory services.
Accepting part-payments for services prior to formal engagement
📚 6. Audit & Record‑Keeping Enhancements
IAs must:
Maintain comprehensive records, including client profiles, communications, advice issued, and receipts.
Conduct annual audits by ICAI, ICSI, ICMAI, or Certified Auditors—submit audit findings (including adverse remarks) to IAASB/SEBI by October 31 or within one month post audit.
Immediately implement corrective actions for any non-compliance flagged.
🛡️ 7. Investor Protection & Market Integrity
Issued under SEBI’s mandate to protect investor interests and regulate the securities market, the circular consolidates dozens of past directives—offering IAs a unified, up-to-date guide to regulatory expectations.
Implications for the Advisory Industry
Elevated Compliance Standards: IAs must strengthen internal processes—governance, audit preparedness, and client communication.
Greater Transparency: Regular disclosure of complaints and fees empowers clients with better information.
Professional Discipline: Prohibitions on free trials and cash payments drive formal agreements and accountability.
Investor First: The reinforced Investor Charter and grievance mechanisms underscore SEBI’s investor-centric approach.
