The Financial Planning Standards Board (FPSB) has sent a proposal to the Sebi, agreeing with the market regulator’s suggestion for a private sector regulator for investment advisors and said it is capable of taking up such a role.

In response to a paper on ‘Regulations of investment advisors,’ the FPSB cites the work it does for certification in financial planning to make its case for being the regulator, which Sebi says should be self-financing.

The FPSB points to the lack of laws to govern the financial planning industry and proposes a supervisory mechanism with a well spelt-out code of ethics. Such a code should comprise matters of integrity, objectivity, competence, fairness, professionalism, diligence and compliance among financial advisors.

The paper recommends separating ‘selling’ from ‘advice’ and has proposed different certification requirements for the two. Says Ranjeet S Mudholkar, CEO, FPSB India: “Advice and selling are two different tasks and require different skills set. They should be certified separately by different regulators. They should also acknowledge a common certification that fulfils the requirement of an investment advisor like certified financial planner (CFP) or associate financial planner (AFP) to bring about some uniformity.”

To gain consumer confidence in the absence of a new law to curb unauthorised, unlicensed practice of financial planning activities by unqualified individuals, the paper suggests a minimum qualification requirement — a base level certification of AFP and a higher level with CFP, with membership of an authorised entity such as FPSB.

Financial planners deal with a variety of products and services like insurance, stocks, asset management, accounting and estate planning. However, each of these services falls under its own ambit of regulation — insurance under Insurance Regulatory and Development Authority (IRDA), stocks and funds under Sebi, pension products under Pension Fund Regulatory and Development Authority (PFRDA) and so on. The paper suggests having a single regulation and authority regulating intermediaries in general and financial planners in particular.

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