New Delhi: With market watchdog Securities and Exchange Board of India (Sebi) planning to keep an eye on investment advisors, Financial Planning Standards Board, India, (FPSB), an association of financial services firms, has sought the status of a regulatory organization for this sector.
“We have sent a proposal to Sebi, seeking the role of first-level regulator for investment advisors,” FPSB India CEO Ranjeet S. Mudholkar said.
The board, set up in 2001 as an association of leading financial advisory firms such as mutual funds, insurance firms and intermediaries, could be considered a potential regulator as by virtue of experience it fits into the criteria of a regulatory organization for investment advisors, he added.
The move comes after Sebi mooted the idea of creating a private sector organization as a first-level regulator for such advisors. Recently, Sebi also introduced a consultative paper on regulation of investment advisors in the country.
“We are of view that whoever interacts with general public, whether an individual or an institution, and gives financial advice, irrespective of the mode of compensation, should be made accountable for the advice given,” Mudholkar said.
FPSB has presented a paper to Sebi, recommending that selling financial products should be considered separate from advice. The board has also proposed different certification requirements for sellers and advisors. They should be certified separately by different regulators, he said.
Mudholkar said the paper also suggested a common certification that fulfils the requirement of an investment advisor such as certified financial planner or associate financial planner to bring about uniformity.
Financial planners deal with a variety of products and services such as insurance, stocks, asset management, accounting and estate planning.
However, each of these services fall under their own ambit of regulation—insurance under Insurance Regulatory and Development Authority, stocks and funds under Sebi, pension products under Pension Fund Regulatory and Development Authority and so on.