As a regulator of one of the most dynamic capital markets in the world, Sebi's role in protecting investor confidence has been commendable and it has earned for itself the reputation of being one of the most respected regulators in the world.
In its recent pronouncements, the Sebi has been talking about having a closer watch on those providing financial advice to investors and also being more stringent on the usage of the title "Financial Advisor". The regulator has voiced concern that there are large numbers of entities rendering investment advice to clients, without any formal contract or discretion and indicated that those who offer investment advice need to be necessarily registered with it. This is a welcome move especially in a country like ours, where no proper distinction is made between pure selling of financial products and financial advice.
Many of these products fall under the jurisdiction of different regulators/agencies. The regulation of such a large number of non-registered players (advisors and distributors) requires enormous resources and reach and is not practicable for a single regulator.
Before providing comments on this issue, let us take a closer look at the experiences of some of the developed countries such as the UK and the US with regard to the profession of investment advising. |
