SEBI’s Enhanced SCORES Platform: A Paradigm Shift in Investor Grievance Redressal

Introduction

In the ever-evolving financial landscape, investor confidence is inextricably linked to timely grievance redressal and regulatory clarity. In this regard, the Securities and Exchange Board of India (SEBI) has undertaken a significant overhaul of the SEBI Complaints Redress System (SCORES), marking a pivotal milestone in investor protection.

SCORES: A Pillar of Investor Protection

Unveiled in 2011, SCORES was established as a pioneering platform to streamline investor grievance resolution and uphold market integrity. Over the years, it has evolved into a crucial component of India’s financial regulatory framework, serving as a vital conduit for addressing investor concerns.

Recent Enhancements to SCORES

In a bid to further strengthen investor protection and market integrity, SEBI initiated a series of substantive changes to SCORES in September 2023. The improved framework includes a feature for automatically escalating and directing investor complaints on SCORES to the designated bodies such as the stock exchanges, the Association of Investment Bankers of India, the Association of Mutual Funds in India (AMFI), and the BSE Administration & Supervision Ltd etc., before forwarding them to SEBI if they remain unresolved. These amendments, scheduled to be enforced on December 4, 2023, represent a paradigm shift in the financial regulatory landscape.

Time-Bound Resolution Framework

Under the revised framework, entities that receive investor complaints via SCORES are required to resolve them within a stringent timeframe of 21 calendar days. This heralds a new era of swifter grievance resolution, ensuring that investors receive prompt attention and redressal.

Seamless Complaint Handling

The complaint lodging process on SCORES has been optimized to enhance efficiency. Once the complaint gets registered, it is automatically transferred to the relevant authority for the resolution process. These authorities are required to generate an Action Taken Report (ATR) as part of a streamlined process, this helps in significantly reducing the risk of bottlenecks.

Enhanced Regulatory Oversight

To ensure greater transparency and accountability, SEBI has introduced designated regulatory bodies to oversee complaints involving listed companies and mutual funds. Listed companies’ grievances are now under the purview of stock exchanges, while the Association of Mutual Funds in India (AMFI) manages complaints concerning mutual funds.

Robust Review Mechanism

Investors are now equipped with a comprehensive review system. They have the option to request a review of the resolution provided by the entity within 15 days of receiving the ATR. This two-tiered review process guarantees that investor grievances are thoroughly evaluated.

Penalties for Compliance Lapses

The regulatory framework now boasts provisions for penalizing companies that fail to resolve investor complaints within the stipulated timeframe. Listed companies that falter in redressal could face substantial fines of Rs 1,000 per day for each unresolved grievance, with identical penalties applicable to suspended trading companies.

Moreover, it is pertinent to note that the complainant may also choose to resolve the grievance through online dispute resolution or approach other legal forums. In such cases, the complaint will be deemed to be resolved on SCORES.

Freezing of Promoters’ Shareholdings

In a significant move, designated stock exchanges can freeze the shareholdings of a company’s promoters and other securities held in their demat accounts if the company fails to address complaints or remit fines within 15 days. This punitive measure underscores the regulatory commitment to swift and effective grievance redressal.

SEBI’s Unwavering Commitment to Transparency and Accountability

The recent revamp of SCORES reflects SEBI’s resolute dedication to transparency, accountability, and the safeguarding of investor interests in India’s vibrant securities market. These far-reaching changes are poised to restructure the grievance resolution process, bolster investor confidence, and solidify the integrity of India’s financial markets.

Conclusion

As SEBI persists in rolling out innovative measures to protect and empower investors, the future holds the promise of a financial ecosystem that is more investor-centric, accountable, and responsive. These modifications are emblematic of a broader transformation in India’s regulatory framework, where investor protection takes center stage. This is a journey worth watching closely, as India charts a course toward more robust investor safeguards and regulatory fortitude.