Strengthening Accountability: SEBI’s New Charter for Investment Advisers
Introduction
On 2nd June 2025, SEBI issued a circular revising the Investor Charter for Investment Advisers (IAs)1. The circular simultaneously (i) rescinds the earlier Investor-Charter circular for IAs dated 13 December 20212 and (ii) amends Clause 8 of the Master Circular for Investment Advisers dated 21 May 20243. The update responds to two recent market initiatives – the Online Dispute Resolution (ODR) platform and the upgraded SCORES 2.0 grievance portal. It is framed as part of SEBI’s broader push for stronger financial-consumer protection, deeper inclusion and greater literacy.
Understanding the Circular
Objective of the Circular
- SEBI seeks to close long-observed information gaps between advisers and retail clients and to embed a standardised, time-bound grievance mechanism.
- Working with the Industry Standards Forum (ISF) for IAs, the regulator has redrafted the Investor Charter to articulate investors’ rights, advisers’ duties and the escalation path when things go wrong.
Key Directives to Investment Advisers and the IAASB
- Display and Dissemination of the Charter: BSE Ltd., acting as the Investment Adviser Administration & Supervisory Body (IAASB), must instruct every registered IA to:
– Publish the updated Investor Charter prominently on their website and any mobile app.
– Keep a printed copy in a conspicuous spot at every office.
– Hand/e-mail the Charter to each new client at onboarding and circulate it to all existing clients. - Complaint-Data Transparency: All IAs must continue disclosing complaint statistics, using the revised Annexure B template, on their digital platforms by the 7th of every succeeding month. The disclosure must show complaints received directly, via SCORES 2.0 or any other source, how many remain unresolved, how many are older than three months, and the average resolution time for the month.
- Immediate Applicability: No transition window is provided; the obligations take effect on the issuance date.
Investor Charter Highlights (Annexure A)
Vision & Mission:
- Vision: “Invest with knowledge & safety.”
- Mission: Enable every investor to choose suitable advice-driven products, track progress toward goals, access clear reports, and enjoy financial wellness.
Scope of Advisory Services:
- Suitability assessments, risk profiling, goal mapping, periodic performance reviews, and unbiased product recommendations—each underpinned by transparent fee disclosures and annual audits.
- Mandatory up-front and continuing disclosures covering disciplinary history, conflicts of interest, details of associates, fee structure, and any substantive use of AI tools in advice generation.
Investor Rights:
Privacy, transparent practices, fair treatment, timely and adequate information, the right to exit a product or service on agreed terms, a clear path to redress, and special access accommodations for vulnerable consumers.
Investor Responsibilities (Do’s & Don’ts):
Engage only SEBI-registered advisers, verify the registration number, pay fees through banking channels (or IAASB’s CeFCoM, where opted), read all disclosures, ask questions, especially on complex or high-risk products, and never hand over trading passwords or fall for assured-return promises.
Grievance Redress Mechanism:
- Stage 1: Client complains to IA; IA must resolve within 21 calendar days.
- Stage 2: If unresolved, client escalates via SCORES 2.0 or e-mails IAASB for a first-level review; SEBI provides a second-level review if needed.
- Stage 3: Persistent disputes go to the SMART-ODR platform for online conciliation or arbitration.
Monthly and Annual Complaint-Trend Reporting (Annexure B)
- IAs must post a month-end table summarising complaints received, resolved and pending, with a distinct row for impersonation-related grievances (which may be netted out once due process is followed).
- A rolling 12-month “trend of monthly disposal” table and a multi-year “annual disposal” table must also be displayed, each showing carried-forward, received, resolved and pending counts, plus average resolution times.
Implications of the Circular on Stakeholders
For Investment Advisers (IAs), the implications are multi-dimensional. First, the mandatory and multi-channel disclosure of the Investor Charter – on websites, apps, onboarding documents, and even office premises – shifts the onus squarely onto the adviser to ensure that the client is well-informed from the outset. This limits the scope for disclaimers to function as shields in litigation and enhances liability in the event of information asymmetry or omission.
In addition, the more stringent disclosure standards, specifically conflicts of interest, disciplinary record, fees, and the use of AI in preparing advice, will mean advisers will have to go back and look at internal records and compliance procedures. For smaller or individual advisers, this can be operationally burdensome. They will now have to be more accurate, not only about the advice they provide, but about the way they come to justify and document the rationale for that advice.
For the investor, the charter provides greater transparency into what their rights are and has expectations regarding timelines, grievance resolution, and quality of service. Specifically, the grievance redress system, strengthened by SCORES 2.0 and SMART-ODR, offers a defined escalation ladder that had remained unclear for many retail investors earlier. It minimizes dependency on lawyers or ad hoc negotiation, making redress more inclusive and less daunting.
For the Investment Adviser Administration and Supervisory Body (IAASB), the circular is bringing in an augmented monitoring and enforcement function. IAASB is now supposed to actively monitor compliance with disclosure and complaint-reporting standards, including impersonation complaints. This enhances expectations of surveillance and standard-setting across the industry.
At a market level, this circular may bring in a quiet but sustained behavioural change. As customers become more conscious of their rights and IAs formalise their compliance procedures, the relationships of trust and accountability might become more effective. But the additional burden on compliance might also contribute to increased entry barriers or concentration, particularly for independent practitioners. SEBI’s message is clear: professional advice cannot exist without professional standards, and those who operate in the grey areas of client engagement will find it increasingly difficult to stay invisible.
Conclusion
The revised Investor Charter for Investment Advisers is a clear articulation of SEBI’s intent to standardise accountability in a space where discretion often blurs boundaries. By mandating transparent communication, codifying investor rights, and tightening grievance redress protocols, the circular draws sharper lines between professional advice and marketing pitch. Investment Advisers must now engage with clients not just as service providers, but as regulated fiduciaries whose conduct can and will be scrutinised.
This also transforms the terrain for investors, who are no longer required to navigate uncertain disclosures or pursue elusive redress. With timescales set out and surveillance bodies enabled, the process is less susceptible to power and more rooted in specified entitlements. While the enhanced burden of compliance will fall heavily on the smaller players, the structural trade-off is a healthier advisory ecosystem – one that values trust, transparency, and recourse over obscurity and overreach. In short, the circular does not only increase standards; it ingrains them into the run-of-the-mill working of investment advisory in India.
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