Skip to main content

Sebi firm on tweaking investment advisory norms

Sebi firm on tweaking investment advisory norms
The Securities and Exchange Board of India (Sebi) may go ahead with tweaking its investment advisory guidelines for mutual fund (MF) distributors, even as it faces opposition from the latter.

In June, the markets regulator had proposed changes to the Sebi (Investment Advisers) Regulations, 2013, to prevent conflict of interest between “advising” and “selling” of investment products by the same entity or person. As part of its proposals, an entity offering investment advisory services shall not be permitted to offer distribution/execution services. Banks, nonbanking financial companies and corporate bodies have to form separate subsidiaries to offer advisory services.

Sebi had proposed to scrap the practice of using “independent financial advisors” by distributors. Instead, they would be called “mutual fund distributors” or MFDs, and will not be allowed to offer any investment advice or financial planning services. MFDs registering as investment advisors shall be allowed to receive trail commission for the products already distributed but will not be allowed to sell/distribute any product. Agencies/entities providing ranking of MF schemes shall be required to register under the SEBI (Research Analysts) Regulations, 2014.

Distributors believe the proposed move could increase mis-selling of MF products. “If distributors are not permitted to provide investment advice as an activity associated with their distribution function, they may sell products without a check on the investor’s risk profile and product suitability,” United Forum, a forum of national and regional associations of distributors and independent financial advisors, had stated in its feedback to Sebi’s proposal in July.

The move will create an unequal playing field between individual and institutional distributors. “While banks and corporate houses will easily be able to segregate advisory and execution, individual advisors who provide a composite service may not be able to do so,” said a sector official.

According to United Forum, converting a sole proprietorship into two firms will enhance conflict, reduce accountability and minimise financial restitution in the event the investor sues the distributor. Distributors believe the proposed changes will hamper the penetration of MFs in smaller cities. One of every Rs 4 invested by individual investors in MF schemes now comes from B15 cities.

The Business Standard, New Delhi, 01st September 2017


Popular posts from this blog

At 18%, GST Rate to be Less Taxing for Most Goods

About 70% of all goods and some consumer durables likely to cost less

A number of goods such as cosmetics, shaving creams, shampoo, toothpaste, soap, plastics, paints and some consumer durables could become cheaper under the proposed goods and services tax (GST) regime as most items are likely to be subject to the rate of 18% rather than the higher one of 28%.

India is likely to rely on the effective tax rate currently applicable on a commodity to get a fix on the GST slab, said a government official, allowing most goods to make it to the lower bracket.

For instance, if an item comes within the 12% excise slab but the effective tax is 8% due to abatement, then the latter will be considered for GST fitment.

Going by this formulation, about 70% of all goods could fall in the 18% bracket.

The GST Council has finalised a four-tier tax structure of 5%, 12%, 18% and 28% but has left room for the highest slab to be pegged at 40%. A committee of officials will work out the fitment and the council…

Coffee-Toffee, the GST Debate Continues

Hundreds of crores of rupees in the form of taxes ride on the exact categorisation of products Is Parachute hair oil or edible oil? Is KitKat a chocolate or a biscuit? Is a Vicks tablet medicament or confectionery? For the taxpayer and the tax collector, this is much more than an exercise in semantics -hundreds of crores of rupees ride on the exact categorisation.
As the government moves closer to rolling out the goods and services tax (GST) on July 1, many such distinctions are being debated so that no ambiguity remains. Not just that, the government is revisiting old tax cases that were lost over product categorisation, according to people with knowledge of the matter, presumably with a view to making sure that revenue collections can be maximised. “In the past, several tax officers had challenged some of the product categorisations, including those in the retail segment, but lost out in court or at appellate level,“ said one of the persons. “Now we have a chance to go ahead with speci…

Deposit gush:-CA Institute Bats for Special Audit