SEBI pushes regulatory body for mutual fund advisors and distributors
SEBI fines

India’s market watchdog, Securities and Exchange Board of India (SEBI), is planning to introduce a self-regulatory panel for mutual fund intermediaries – distributors, brokers, advisors etc. As the mutual fund industry is gaining more popularity, the role of qualified advisors and distributors are becoming more profound.

Did you know there are around 1.2 lakh mutual fund distributors and 1136 SEBI-registered advisers in India as per the most recent data?

It is not practical for SEBI to monitor all these entities directly regularly. So, the need of the hour is to have a basic filter in the form of a first-level screening. This Self-Regulatory Organization (SRO) is expected to address issues regarding the quality of advice investors receive from these intermediaries.

SEBI will accept public comments and opinions on the same until 21 April 2019. They want to ensure a level of uniformity in the distributary practices by enforcing a code of conduct as well as check suspected mismanagements like product misinformation and not keeping the portfolio in line with the investment objective of a particular fund.

With numerous grievances against advisories (in the pipeline to be resolved) regarding overpricing of funds, fake promises of potentially high returns and general misbehaviour, SEBI has decided to zero in on such entities through SRO. As a panel, it represents a particular class of entities and external experts. A retired Supreme Court or High Court Judge will be selected to head the committee.

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