In a bid to strengthen the conduct of Investment Advisers (IAs) while providing investment advice and to protect the interest of investors, SEBI has released a set of code of conduct which IAs have to adhere to from January 1, 2020.
Investment Advisers will not be permitted to offer free trial for any products/services to prospects. Further, IAs cannot accept part payments (where some part of the fee is paid in advance).
IAs cannot accept cash deposit as fees. They can accept fees by account payee crossed cheques/demand draft or by way of direct credit into their bank account through NEFT/ RTGS/IMPS/UPI.
IAs can offer advice only after assessing the risk profile of clients. Also, they have to obtain client consent on completed risk profile either through registered email or physical document.
IAs will also have to display number of complaints received and resolved by them from clients on their website on a monthly basis.
As on December 2019, there are 1,269 IAs registered with SEBI.
