SEBI issues Circular to strengthen the Investor Grievance Redressal Mechanism

Among other clarifications, the Circular states that the Stock Exchange will ensure that investor complaints are resolved within 15 working days from the date of receipt of the complaint.

In order to further strengthen the Investor Grievance Redressal Mechanism, the Securities and Exchange Board of India (SEBI) has issued a Circular which provides certain clarifications to Circular No. CIR/MRD/DSA/24/2010 dated August 11, 2010; Circular No. CIR/MRD/DSA/2/2011 dated February 09, 2011; and Circular No. CIR/MRD/ICC/30/2013 dated September 26, 2013. This Circular is to come into effect from January 01, 2020.

With respect to the resolution of complaints by the Stock Exchange, the Circular states that the Stock Exchange shall ensure that investor complaints are resolved within 15 working days from the date of receipt of the complaint. Additional information, if any, will be sought from the complainant within 7 working days from the date of receipt of the complaint. In the event additional information is sought, the period of 15 working days is to be counted from the date of receipt of the additional information sought. The Stock Exchange shall maintain a record of all complaints addressed/redressed within 15 working days from the date of receipt of the complaints/additional information. If the complaint is not resolved within the stipulated time frame, the reason for non-redressal within the given time frame is also to be recorded.

On the issue of service-related complaints, the Circular elucidates that the Stock Exchange shall resolve such complaints at its end. However, in case the complainant is not satisfied with the resolution, the same may be referred to the Investor Grievance Redressal Committee (IGRC) after recording of the reasons in writing by the Chief Regulatory Officer of the Stock Exchange or any other officer of the Stock Exchange authorized in this matter by the Managing Director.

Service-related complaints shall 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 anddemat account transferred without permission etc.

For complaints related to trade, settlement and 'deficiency in services' resulting in any financial loss, the Stock Exchange will resolve the complaint on its own as per the time lines prescribed. However, if the complaint is not resolved amicably, the same shall be referred to the IGRC, after recording of the reasons in writing by the Chief Regulatory Officer of the Stock Exchange or any other officer of the Stock Exchange authorized in this matter by the Managing Director.

It shall be the responsibility of the Stock Exchange to provide documents/ necessary information after collecting the same from the member and/ or complainant and provide necessary assistance to the IGRC to ensure resolution of complaints in a timely manner.

The IGRC shall have a time of 15 working days to amicably resolve the investor complaint through a conciliation process. If the IGRC needs additional information, then the IGRC may request the Stock Exchange to provide the same before initiation of the conciliation process. In such case, where additional information is sought, the timeline for resolution of the complaint by the IGRC shall not exceed 30 working days.

The IGRC will have to decide the claim value admissible to the complainant, upon conclusion of the proceedings of the IGRC. In case the claim is admissible to the complainant, Stock Exchanges shall block the admissible claim value from deposit of the member as specified in this regard.

The expenses of the IGRC shall be borne by the respective Stock Exchange and no fees shall be charged to the complainant/member.

For any dispute between the member and the client relating to or arising out of transactions in the Stock Exchange, which is of civil nature, the complainant/ member shall first refer the complaint to the IGRC and/ or to the arbitration mechanism provided by the Stock Exchange before resorting to other remedies available under any other law.

The Circular also clarifies that the sole arbitrator or the panel of arbitrators, as the case may be, appointed under the Stock Exchange Arbitration Mechanism, shall always be deemed to have the competence to rule on its jurisdiction. A complainant/member, who is not satisfied with the recommendation of the IGRC, shall avail the arbitration mechanism of the Stock Exchange for settlement of complaints within six months from the date of the IGRC recommendation.

The Stock Exchanges have been advised to make necessary amendments to the relevant by-laws, rules and regulations for the implementation of the above decision immediately; bring provisions of this circular to the notice of the members of the Stock Exchange and also disseminate the same through their website; and communicate to the SEBI, the status of implementation of the provisions of this circular in the Monthly Development Reports to the SEBI.