SEBI Strengthens Complaint Management System with New Amendments to Enhance Investor Protection
The Securities and Exchange Board of India (SEBI) has recently implemented new amendments to its complaint management system, aiming to enhance investor protection and improve the resolution process for customer disputes. As a vital regulator and monitor of the Indian capital and securities market, SEBI recognizes the importance of promptly and efficiently addressing complaints from investors affected by errors or misconduct in the market.
To facilitate complaint management and dispute resolution, SEBI has established an online platform called the ‘SEBI Complaint Redress System (SCORES).’ This platform allows investors to lodge complaints against authorized intermediaries and listed firms under various acts and regulations. Investors who hold accounts with depository participants or brokers can submit disputes within a three-year limitation period from the date of the cause of action. In cases where stock exchanges or depositories fail to resolve grievances, investors can file for arbitration.
SEBI has put in place an arbitration mechanism for resolving disputes between clients and members according to specified rules and regulations. The panel of arbitrators is selected based on factors such as age, qualifications, and experience in financial services, forming a Common Pool. If parties do not choose arbitrators from this pool, an automated process randomly selects arbitrators.
The arbitration claims must be filed within a three-year limitation period. Claims up to Rs 25 lakhs are handled by a sole arbitrator, while claims above Rs 25 lakhs are dealt with by a panel of three arbitrators. The appointment of arbitrators should be completed within 30 days of receiving the application, and the arbitration process should conclude within four months from the date of appointment. SEBI ensures the availability of arbitration facilities at specified centers.
In cases where a party is dissatisfied with an arbitral award, the right to appeal to the appellate panel of arbitrators is granted. The appeal must be filed within one month of receiving the award, and the appellate panel must conclude the appeal within three months from the date of its appointment.
To further enhance its complaint management system, SEBI has recently issued amendments to the Alternative Dispute Resolution Mechanism. These amendments aim to revitalize the SEBI Complaint Redress System (SCORES) by reducing response timelines and ensuring quicker resolution for complainants. Additionally, complaints will now be automatically routed to the relevant regulated entities, expediting the process further. An auto-escalation mechanism has also been introduced to ensure adherence to prescribed timelines and emphasize the importance of timely action and accountability.
SEBI has expanded the Dispute Resolution Mechanism through arbitration, conciliation, and mediation to include various regulated entities. This includes merchant bankers, registrars to an issue and share transfer agents, debenture trustees, mutual funds, custodians, credit rating agencies, and more. The aim is to streamline the dispute resolution process by implementing a standardized procedure for handling claims, differences, or disputes between these entities and their clients/investors.
The recent amendments to SEBI’s Alternative Dispute Resolution Mechanism represent a significant step towards safeguarding investor interests. By implementing measures to enhance the resolution process within the securities market, SEBI strives to create a transparent and efficient system that addresses investor issues and promotes a secure market. These amendments reinforce SEBI’s commitment to investor protection and efficient capital market operations.
Disclaimer: This article is for informational purposes only and should not be construed as financial advice.
