FPSB India aims to be FAs first-level regulator

Mumbai, May 4: Responding to the SEBI's consultative paper on ''Regulation of Investment Advisors'', Financial Planning Standards Board (FPSB) India here today expressed its willingness to essay the role of a private sector self-financing regulating organization during a round table conference today.

The chartered members of the Board unanimously said that FPSB would act as a first level regulator for financial advisors (FAs).

FPSB India chairman Shailesh H Haribhakti reaffirmed that the organization would play a very active role in ensuring that the right kind of service reaches the right kind of people through this process so that there is awareness of what is available and how producers and distributors of financial products can come together in a way that is a win-win situation for all.

Speaking in the conference, FPSB India CEO Ranjeet S Mudholkar pointed out, ''Advising and selling are two different concepts entirely and we are very happy that SEBI has come out with this paper. There should be certification for financial advisors the way there is certification for those who are selling financial products.'' He added that FPSB India, by virtue of its four 'E's -- Education, Examination, Experience and Ethics requirement for its certification, fits into the criteria outlined by SEBI for a private sector self-financing regulating organization.

Emphasizing the need for rating financial advisors, he said ''Firms would be categorized based on services offered, with each category indicating competence to provide services of a particular kind. When a customer walks into an advising institution, he should know what to expect.'' He also compared the system to that of rating of hotels and software firms.

Lotus India Asset Management CEO Ajay Baga underlined the need for market, legal and regulative framework for financial advisors to follow. ''It will take time as the financial services market is very disparate from home offices to large conglomerates.'' Kotak Mahindra Bank executive director C Jayaram explained, ''Large parts of the financial planning industry are extremely well regulated but there's an army of distributors extremely unregulated.

Anyone can set up shop, so there is clearly a need for regulating that space. As an organization that promotes financial planning in India, we want that space to be regulated.''

UNI