The Securities and Exchange Board of India (SEBI) has set up a working group to review the regulatory framework governing mutual fund distributors (MFDs), with the aim of aligning it more closely with the rules applicable to investment advisers (IAs) and bringing greater clarity to India’s financial advisory ecosystem.
Announcing the move, SEBI Chairman Tuhin Kanta Pandey said the regulator is seeking to address overlaps between the two segments and streamline their roles.
Key Highlights
- SEBI sets up working group to review mutual fund distributor rules and align advisory framework.
- Move aims to reduce overlaps, improve transparency, and strengthen investor protection in financial advisory ecosystem.
“The working group will examine existing regulations and suggest ways to reduce overlaps between mutual fund distributors and registered investment advisers,”Tuhin Kanta Pandey said, highlighting the need for clearer role definitions and regulatory consistency.
The proposed review is expected to reduce conflicts of interest, improve transparency, and clearly distinguish between product distribution and fee-based advisory services. Industry experts believe the move could significantly reshape compensation models, compliance requirements, and business structures across the financial advisory ecosystem. Alongside this, SEBI is also working on a common advertisement code and a digital platform, ‘SEBI Setu’, to simplify compliance and improve communication with investors.
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The initiative comes amid concerns about the declining number of registered investment advisers in India, even as the investor base continues to expand. Pandey warned that gaps in regulated advice could be filled by unregulated sources, emphasizing the importance of strengthening the formal advisory ecosystem. Overall, the move signals SEBI’s broader push toward a more transparent, investor-centric framework for financial advice in India.
