SEBI’s Push For Unbiased Financial Advice: Drawing The Line Between Advisory And Distribution

For years, India’s financial services industry operated in a grey zone where financial advice and product sales often went hand in hand. Investors seeking objective advice often found themselves steered toward commission-generating products, a structural conflict of interest hard-wired into traditional financial services groups.

The problem was structural. When the same financial group advises clients and earns commissions from selling financial products, conflict of interest are inevitable. There was an absence of a unified, dedicated framework governing individuals and entities engaged in offering financial advice. Prior to 2013, investment advice in India was largely unregulated or loosely tied to product distribution, creating inherent conflicts of interest where advisors could covertly prioritize commission-driven products over the actual financial well-being of their clients.