SEBI has made changes in existing Investment Adviser regulation via amendment dated July 03, 2020. SEBI (Investment Advisers) (Amendment) Regulations, 2020
Some key changes are highlighted as below:
1. Distributors shall not use the nomenclature “Independent Financial Adviser or IFA or Wealth Adviser or any other similar name” unless registered with the Board as Investment Adviser.
2. An individual investment adviser shall not provide distribution services.
3. IA shall have adequate qualification, experience of at least 5 years and certification as required under the law.
4. Mandatory agreement to be entered between Investment Adviser and the client for ensuring greater transparency with reference to advisory activities
5. Fresh certificate cannot be obtained through CPE.
6. Networth shall be 50 lakhs for Non-individual IA and 5 lakhs for Individual IA.
7. Individual IA whose number of clients exceed 150 shall apply for registration as Non-individual IA.
8. Investment Adviser shall be entitled to charge fees for providing investment advice from a client in the manner as specified by the Board.
9. IA shall Conduct Audit Annually from Practising Company Secretary or CA and Submit the Audit report to SEBI.
10. The family of an individual investment adviser shall not provide distribution services to the client advised by the individual investment adviser and no individual investment adviser shall provide advice to a client who is receiving distribution services from other family members.
11. A non-individual investment adviser shall have client level segregation at group level for investment advisory and distribution services.
12. Investment adviser shall provide implementation services to its advisory clients only through direct schemes/products in the securities market
13. Investment adviser or group or family of investment adviser shall not charge any implementation fees from the client
The guidelines dealing with various other issues like key terms and conditions of Investment Advisory Services agreement, modes of charging fee, periodicity etc. will be separately specified through a Circular.
These amendments shall come into force on the ninetieth day from the date of their publication in the Official Gazette i.e. from October 03, 2020.
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