RBI to Introduce Internal Ombudsman Scheme for Select NBFCs to Simplify Grievance Redressal Mechanism

The Reserve Bank of India (RBI) on Friday announced the introduction of an internal ombudsman scheme (IOS) to redress grievances at select...

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Axis Mutual Fund Reclassifies its Dynamic Equity Fund as Balanced Advantage Fund

Axis Mutual Fund has renamed and re-positioned its four year old Axis Dynamic Equity Fund as Balanced Advantage Fund.

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Auto debit payments to require additional authentication from 1 October

Starting 1 October, any automatic recurring payment above Rs 5,000 for various services including recharge and utility bill will require an...

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Depositors of PMC Bank and other failed cooperative banks to get deposit insurance cover

Depositors of 21 failed cooperative banks including PMC Bank will now get deposit insurance cover of up to Rs 5 lakh from Deposit Insurance and...

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DICGC can charge differential premium for deposit insurance at banks

The Deposit Insurance and Credit Guarantee Corporation (DICGC) can usher in a differential premium system (DPS) for banks, based on their risk...

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Bank Locker: RBI Fixes Banks' Liability to 100 Times of Annual Rent

The Reserve Bank of India (RBI) has revised its guidelines for locker facility provided by banks, and fixed banks' liability at 100 times the annual...

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ATMs without cash for more than ten hours will be penalised, says RBI

The Reserve Bank of India has proposed penalties for banks and White Label ATM operators if their ATMs are found to be lying without replenishment...

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Post office allows authorized persons of senior citizens to carry out transactions, withdrawals, etc

The Department of Posts has allowed senior citizens to send 'authorized person' on their behalf for carrying out withdrawal or other transactions...

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Beware of Bogus Offers to Buy or Sell Old Banknotes

The Reserve Bank of India cautioned citizens against any bogus offer to buy or sell old banknotes and coins citing on-going fraudulent activities,...

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Rajya Sabha Passes Bill to Provide Liquidity to Small Deposit holders in Stressed Banks

The Rajya Sabha passed the Deposit Insurance and Credit Guarantee Corporation (Amendment) Bill that will benefit small deposit holders in troubled...

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Changes in Our Business Model
 
 
Greetings from Moneylife Advisory Services
 
Between financial years 2019-21, SEBI has come up with extensive changes to investor advisor regulations. On Sep 23, 2020, SEBI had issued new additional guidelines. This comes just two months after extensive changes announced in July 2020. Earlier, in December 2019 there was an ad hoc circular
 
As a result of these changes, IAs, cannot accept fees through credit cards, will have to sign a 26-clause investor agreement, have to maintain physical record written & signed by client, telephone recording, emails, SMS messages and any other legally verifiable record for five years. IAs were already asked to record the suitability and rationale for every piece of advice given, sign them and store them for five years.
 
While these extensive and frequent changes, designed to strengthen the conduct of IAs are well-meaning, these have sharply increased compliance efforts and cost. We, being online advisors, find many of changes harder to implement, compared to advisors working in the physical space. We will have to have an army of advisors, administrative and tech staff to be compliant. If we do this, we will have to divert money to these areas and the cost of our service will double. We want to remain the least-cost service in the market to benefit more and more people. In the circumstances, we are forced to change our business model from “advisory” to “research”. This will mean the following:
 
What remains the same:
  • Recommendations on insurance, investment and Lion stocks, will continue as a part of the MAS premium subscription. Our strength has always been research and this will remain available to you through our recommendations.
  • The magazine and all textual content will remain as part of the service
  • The investools will have to be reworked and will offer model portfolios. We will have to suspend the restructuring tool.
 
What changes:
  • The interactions in Ask / Handholding will offer investment advice but not specific to your situation. It will offer information on investment products and also clarify your doubts about various financial products. It will be a forum for information, not for advice. This will be implemented with immediate effect and our guidelines in Ask, reflect this now.
 
Over the next few weeks our site and our communication to you will reflect these and other additional changes.
 
We feel this will not affect you much in terms of what really matters in investing: knowing what to buy and when to buy. This is our edge and it will still be available to you.
 
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Debashis Basu
Founder