The Securities and Exchange Board of India vide its notification dated 23rd September 2020 has issued guidelines for investment advisors which shall come into force from 30th September 2020.
As per the guidelines existing clients, who wish to take advisory services, will not be eligible for availing distribution services within the group/family of IA and only new clients will be eligible to avail either advisory or distribution services within the group/family of IA. However, the option to avail either advisory services or distribution services shall be made available to such client at the time of onboarding. PAN of each client shall be the control record for identification and client level segregation.
The investment adviser shall maintain a record on annual certificate from an auditor confirming compliance with the client level segregation requirements as specified in Regulation 22 of amended IA Regulations. Such annual certificate shall be obtained within 6 months of the end of the financial year and form part of a compliance audit, in terms of Regulation 19(3) of the amended IA Regulations.
Further Regulation 15 A of the amended IA Regulations provide that Investment Advisers shall be entitled to charge fees from a client in the manner as specified by SEBI, accordingly Investment Advisers shall charge fees from the clients either through assets under Advice mode or Fixed fee mode.
IA shall maintain records of interactions with all clients including prospective clients where any conversation related to advice has taken place inter alia, in the form of a Physical record written & signed by client, Telephone recording, Email from registered email id, Record of SMS messages, any other legally verifiable record.
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