Capital markets' regulator Sebi on Wednesday introduced a simplified certification framework for certain categories of employees working with investment advisers, a move aimed at reducing compliance requirements and improving ease of doing business within the financial services sector.
The revised framework specifically targets personnel engaged in sales, relationship management and other non-core functions who interact with clients but are not directly involved in providing investment advice or making advisory decisions.
In a circular issued on Wednesday, Sebi said the decision was taken after considering feedback received from market participants and industry stakeholders seeking a more practical approach to certification requirements for support and client-facing staff.
"Based on the feedback from market participants and as a step towards ease of doing business, it has been decided to specify a lighter NISM certification module for PAIA, such as sales staff, relationship managers and other staff, who only perform sales and other non-core services," the regulator said.
PAIA, or persons associated with investment advice, include employees who support the functioning of investment advisory firms. Sebi clarified that the revised certification requirement applies only to those individuals who maintain contact with clients but do not participate in advisory activities, investment recommendations or other advice-related functions.
Under the new framework, such employees will be required to obtain certification by passing the "NISM Series-XXV-B" examination, a streamlined module designed for professionals performing non-advisory roles.
The regulator noted that the lighter certification programme will ensure that these employees possess the necessary understanding of regulatory requirements and client service standards without being subjected to the more extensive qualification requirements applicable to investment advisers.
However, Sebi made it clear that employees directly involved in investment advisory functions will continue to be governed by the existing certification framework. Such personnel must clear both the "NISM Series-X-A: Investment Adviser (Level 1)" examination and the "NISM Series-X-B: Investment Adviser (Level 2)" examination to meet regulatory eligibility requirements.
These examinations are intended to ensure that advisory professionals possess adequate domain knowledge, technical expertise and professional competence before providing investment-related guidance to clients.
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By introducing differentiated certification standards, Sebi aims to align regulatory requirements more closely with the actual responsibilities performed by various categories of employees within investment advisory firms.
Market participants have long argued that requiring non-advisory staff to undergo the same certification process as investment advisers created an unnecessary compliance burden, particularly for firms employing large client-service and relationship-management teams.
The latest move is expected to reduce operational costs, simplify onboarding processes and provide greater flexibility to registered investment advisers while maintaining appropriate standards of investor protection and regulatory oversight.
Sebi also reiterated that the revised certification framework does not dilute professional standards for those directly engaged in offering investment advice, where rigorous qualification requirements will continue to remain in force.
The regulator stated that passing the prescribed NISM certification examinations remains essential for ensuring professional preparedness, regulatory awareness and competency among employees associated with investment advisory activities.
According to the circular, the new provisions have come into effect immediately, allowing eligible firms and employees to transition to the revised certification framework without delay.
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