SEBI Releases Investors Charter with Do's and Don’ts

With the proliferation of investment products in the market and a surfeit of options, investors are spoilt for choice. However, it also means that a competitive landscape forces many salespersons to hard-sell investment products and ideas to investors.

In the process, there is always the risk that it could result in mis-selling of products. To address this issue, SEBI has come out with a detailed investment charter with dos and don’ts for investors.

The charter was first proposed in the Union Budget 2021-22 and has finally seen the light of day on 17-Nov this year. Investors have to be enabled to deal with investments with an understanding of the risks involved and invest in a fair, transparent manner. All the SEBI registered entities will be mandatorily required to adhere to this charter.
 

Rights and responsibilities of investors

The charter clearly lays out the rights and the responsibilities of the investors and here is a gist of the same.

A) Investors have the right to get fair and equitable treatment as participants in the financial market. They also have the right to have their grievances redressed by SEBI, exchanges, depositories etc in a time bound manner. Investors also have the right to expect quality service and unbiased advise from SEBI registered entities like brokers, mutual funds etc.

B) However, investors also have some responsibilities. They are responsible for informing themselves about the risks in any investment by reading the offer document in detail. Investors also have the responsibility to only deal with SEBI registered intermediaries and also ensure updating of their details with the institutions proactively.
 

Dos and Don’ts specified in the Investor Charter

The dos and don’ts are an extension of the rights and responsibilities, just that specific action points are cited more clearly.

I) In the list of Dos, the investor must take the responsibility to read the offer document and familiarize themselves with the risks. They are also required to understand details of the fees charged, brokerage charged and other related charges.

Investors must also make it a point to keep track of their investments by downloading regular statements and maintain a record for reasonable period of time. Investors must also pay advance taxes and file tax returns on time for such investment income.

II) In the list of don’ts, investors must make it a point never to pay in cash and all dealings with brokers must only be done via cheque, DD or NEFT where there is an audit trail. The investor must never share sensitive information like trading password, username and other details in their own interest.