Redefining Investor Protection: SEBI’s Revised Investor Charter
Introduction
On 2nd June 2025, SEBI issued a circular to update the Investor Charter for Research Analysts (RAs)1. The circular amends Clause 5 of the Master Circular for Research Analysts dated 21 May 20242 and rescinds the earlier Investor Charter circular of 13 December 20213. The revision responds to recent market developments, especially the launch of the Online Dispute Resolution (ODR) platform and the upgraded SCORES 2.0 grievance portal. It aims to strengthen financial-consumer protection, inclusion, and literacy.
Understanding the Circular
Objective of the Circular
- SEBI’s principal goal is to ensure investors receive clear, fair and comprehensive information from RAs, and that grievance redressal is transparent and time-bound.
- In consultation with the Industry Standards Forum (ISF) for Research Analysts, SEBI has overhauled the Investor Charter to reflect current market infrastructure and enhanced disclosure expectations.
Key Directives to Research Analysts and the RA Administration & Supervisory Body (RAASB)
- Display and Dissemination: BSE Ltd., in its role as RAASB, must instruct every registered RA to publish the updated Investor Charter prominently on their website and mobile app (if any), keep a physical copy in an easily visible office location, include it in the client-onboarding kit, and circulate it by e-mail or letter to all existing and new clients.
- Complaint-Data Disclosure: All RAs must continue to post monthly complaint statistics, following the new format in Annexure B, on their digital platforms by the 7th of the succeeding month. Data must cover complaints received directly from investors, via SCORES, or other channels, and indicate how many remain unresolved beyond three months, together with average resolution time.
- Immediate Effect: All provisions take effect on the date of the circular; no transitional period is provided.
Investor Charter (Annexure A)
Vision and Mission:
- Vision: “Invest with knowledge & safety.”
- Mission: Enable every investor to choose suitable products, monitor progress toward goals, access clear reports and achieve financial wellness.
Scope of Business Conducted by RAs:
- Publish research reports grounded in thorough analysis and public information.
- Offer independent, unbiased views and recommendations, with explicit disclosure of financial interests.
- Adhere to SEBI’s advertisement code, maintain interaction records (including pre-onboarding conversations) and undergo an annual audit.
Core Services to Investors:
- Provide clear service terms, complete KYC for fee-paying clients, and disclose all material facts – business activity, disciplinary history, conflicts of interest, associate relationships and use of AI tools.
- Distribute research reports without discrimination, respect confidentiality until public release, and protect clients’ personal data.
- State realistic service timelines, give explicit cautions on complex or high-risk products and treat every client with honesty and integrity.
Grievance Redressal Framework:
- Stage 1: The investor approaches the RA, who must resolve the grievance within 21 days.
- Stage 2: Unresolved complaints can be escalated through SCORES 2.0 or emailed to the RAASB, which performs the first-level review. SEBI undertakes a second-level review if needed.
- Stage 3: If still dissatisfied, the investor may move to the SMART-ODR platform for online conciliation or arbitration. Physical complaints can be mailed to SEBI’s Investor Assistance & Education Office in Mumbai.
Investor Rights:
- Entitlement to privacy, transparent practices, fair treatment, adequate information, timely disclosures and redress.
- The right to exit a product under agreed terms, receive guidance on complex offerings, and provide feedback.
- Vulnerable consumers enjoy additional access accommodations.
Investor Responsibilities (Do’s and Don’ts):
- Engage only with SEBI-registered RAs, verify the registration number, and pay fees through banking channels or the RAASB’s CeFCoM (for fee-paying clients).
- Read disclosures in research reports, ask questions on recommendations – especially for high-risk products – and understand the right to stop the service.
- Never hand over investment funds to an RA, share account credentials, or succumb to unsolicited promises of assured returns or time-bound discounts.
Monthly and Annual Complaint-Trend Reporting (Annexure B)
- RAs must publish a monthly table detailing complaints received, resolved and pending, with a specific line item for impersonation-related complaints that can be netted out after due process.
- They must also display a rolling twelve-month “trend of monthly disposal” table and an “annual disposal” table covering multiple financial years.
- Average resolution time (in days) must be calculated as total resolution days divided by the number of complaints resolved in the month.
Implications of the Circular on Stakeholders
The revised SEBI circular substantially changes the compliance and disclosure environment for Research Analysts (RAs), imposing a greater responsibility of accountability while trying to rebalance the relationship between providers of financial services and retail investors. For RAs, the mandating of the revised Investor Charter in various platforms – websites, mobile apps, office premises, and onboarding communications – is a move towards enforced transparency. This is not a mere administrative formality. It requires a rethinking of compliance systems internally, content creation, and client communication approaches, particularly for independent, small analysts who might not have access to the infrastructure of big institutions.
More importantly, the granular disclosure requirements for conflict of interest, disciplinary history, use of AI in research, and third-party materials heighten both the stakes for diligence and recordkeeping. RAs have to be more careful with their promotional material, more aware of their exposure under the law, and ready to face increased scrutiny at the first sign of failure.
For investors, the new Charter is a material improvement. Through the codification of rights such as the the right to fair treatment, exit, and transparency around complicated products, it tries to close the persisting asymmetry of information and bargaining power. The incorporation of SCORES 2.0 and SMART-ODR within the grievance redressal system forms a multi-layered system, providing investors with structured recourse without going to court.
RAASB, as the overseeing authority, now assumes a more active operational role. Its obligation to oversee, aggregate, and respond to complaint information such as impersonation-related complaints brings with it real-time surveillance responsibilities. These could be met with more frequent audit or reporting requirements for RAs under its jurisdiction.
Conclusion
The revised SEBI circular is more than a compliance update; it is a direct response to evolving investor expectations and the regulator’s intent to raise professional standards across the research analysis ecosystem. By redefining disclosure norms, standardizing grievance redress mechanisms, and enhancing visibility of investor rights, the circular reasserts SEBI’s long-standing emphasis on informed participation and market integrity. For research analysts, it enshrines a more formal, documentable relationship with clients, in which transparency and fairness are not regulatory checkboxes but keystones of professional behavior.
The investor charter, now filled with detailed obligations and expectations on both sides, serves both as a protective shield and a performance benchmark. While the regulatory burden could shift to analysts, the benefit is that of a more trusting and educated investor base, something the market has frequently been deprived of. Overall, the circular strengthens procedural protections without watering down the independence of research professionals, indicating a measured response that aims to instill accountability in investor services.
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