SEBI will review the regulatory framework governing mutual fund distributors (MFDs) and address overlaps with investment advisers (IAs), and is also preparing a common advertisement code and a digital compliance platform for advisers.
Speaking at ARIA Aspire 2026, SEBI Chairman Tuhin Kanta Pandey said the regulator has set up a working group to examine the current framework and harmonise any overlap between the two intermediary segments. “A working group has been set up to review the extant regulatory framework of MF Distributors and harmonise overlap, if any, between MFDs and IAs,” he said.
The move comes as the regulator looks to strengthen the investment advisory ecosystem and ensure clearer regulatory boundaries between advisory and distribution models.
Pandey said SEBI is also preparing a common advertisement code for all intermediaries to improve consistency in communication with investors. “A common advertisement code for all intermediaries is being prepared. This should reduce operational challenges and improve consistency,” he said.
“A digital platform — SEBI SETU — is being developed, to provide simple and end-to-end regulatory guidance from registration to ongoing compliance for IAs,” Pandey said.
The regulator is also working on a simplified penalty framework for IAs to encourage compliance. “A standardised light-touch penalty structure for IAs is being worked out. This should promote compliance while ensuring transparency and fairness,” he said.
India’s investment advisory ecosystem is undergoing a transition, with a shift toward more institutional entities. “Today, there are around 1,000 registered IAs — 470 individuals and 530 non-individuals,” he said, adding that the move toward non-individual entities indicates a more institutional ecosystem.
Declining IA number
At the same time, the number of registered advisers has declined in recent years even as the investor base continues to expand. “It is a matter of concern that the number of registered IAs has declined since 2021. As India’s investor base expands rapidly, our market needs more regulated advisers,” Pandey said.
He said that the gap could be filled by unregulated voices on social media. “Otherwise, the gap will be filled by unregulated voices — like finfluencers — who present opinion as expertise and speculation as strategy,” he said. According to SEBI’s investor survey, nearly 62 per cent of prospective investors are influenced by finfluencers.
“This is undesirable. It distorts investor behavior, weakens discipline and erodes trust,” Pandey said. SEBI will continue efforts to encourage more professionals to enter the regulated advisory space while simplifying compliance requirements without compromising investor protection.