Markets regulator Securities and Exchange Board of India decided to tighten its eligibility norms for investment advisers and decided to introduce an upper limit for their fees.
SEBI also barred the use of titles like independent "financial advisers" or "wealth advisers" by those dealing in the distribution of securities, unless they are registered as investment advisers also.
Announcing a slew of amendments to its regulations for investment advisers, approved by SEBI's board, the regulator said an individual adviser cannot provide distribution services, while firms would need to segregate advisory and distribution activities at the client level.
The new rules framed, after considering four consultation papers and public comments, are also aimed at bringing clarity in payment of fees and introduction of an upper limit on fees charged to investors, SEBI said. The last consultation paper was floated for public comments in January.
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SEBI will also introduce enhanced eligibility criteria for registration as an investment adviser including for networth qualification and experience. There will be a provision for grandfathering existing individual advisers.
For greater transparency, an agreement would have to be signed between an adviser and the client incorporating all terms and conditions.
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