SEBI strengthens investor grievance redressal mechanism
November 9, 2020
SEBI has strengthened the investor grievance redressal mechanism. It has issued the following clarifications, based on recommendations of a working group, which will become effective from 1 January 2021 :
Resolution of complaints : Investor complaints will be resolved by stock exchanges within 15 working days from the date of receipt of complaint. Any additional information, required from the complainant will be sought within 7 working days from the date of receipt of complaint. The period of 15 working days will be counted from the date of receipt of additional information sought. Reasons for non-redressal will be recorded where complaints are not resolved within the stipulated time frame. Service related complaints will be resolved by stock exchanges themselves. These include non-receipt/ delay of Account statement, non-receipt/ delay of bills, closure of account/ branch, technological issues, shifting/closure of branch without intimation, improper service by staff, freezing of account, alleged debit in trading account, contact person not available in Trading member’s office, demat account transferred without permission, among others. Where the complainant is not satisfied with the resolution, the complaint may be referred to the Investor Grievance Redressal Committee (IGRC), after recording the reasons in writing.
Referral of complaints to IGRC and their handling: Complaints related to trade, settlement and ‘deficiency in services’ resulting in any financial loss will be referred to the IGRC, if the stock exchange is unable to resolve it amicably within the prescribed timelines after recording the reasons in writing. The Stock Exchange is obligated to provide documents/ necessary information after collecting the same from the member and/ or the complainant and provide assistance to IGRC to ensure resolution of complaints in a timely manner. The IGRC shall resolve the complaint in the following manner:
IGRC has a time of 15 working days to amicably resolve the investor complaint through conciliation process. If IGRC needs additional information, then IGRC may request the Stock Exchange to provide the same before the initiation of the conciliation process. In such case, where additional information is sought, the timeline for resolution of the complaint by IGRC shall not exceed 30 working days.
IGRC cannot dispose the complaint citing “Lack of Information and complexity of the case”. The IGRC shall give its recommendation to Stock Exchange.
IGRC must decide claim value admissible to the complainant upon conclusion of its proceedings. In case the claim is admissible the Stock Exchanges will block the admissible claim value from the deposit of the member as specified in this regard.
Expenses of IGRC will be borne by the respective Stock Exchange and no fees will be charged to the complainant/member.
The Stock Exchange shall organize regular training program for IGRC members in consultation with National Institute of Securities Markets (“NISM”). The cost of such program shall be borne by Investor Service Fund (“ISF”) of the Stock Exchange.
Resolution of disputes/ Arbitration: With respect to any dispute of a civil nature between the member and the client relating to or arising out of transactions on Stock Exchange, the complainant/ member shall first refer the complaint to the IGRC and/ or to arbitration mechanism provided by the Stock Exchange before resorting to other remedies available under any other law. The sole arbitrator or the panel of arbitrators appointed under the Stock Exchange arbitration mechanism will always be deemed to have the competence to rule on its jurisdiction. This arbitration mechanism may be availed within six months from the date of IGRC recommendation in case the complainant is not satisfied with the said recommendation.
To refer to the SEBI circular dated 6 November 2020, click here.
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