top of page
  • Instagram
  • X
Search

Redressal of Investor grievances


A grievance is most poignant when almost redressed -       Eric Hoffer

 

SEBI’s regulations on the mechanism of grievance redressal through the centralized web-based ‘Complaints Redressal System’ (SCORES) which was launched on June 8, 2011, has seen several changes in the last few years.

More recently, only last month, SEBI issued a circular delaying the effective date for certain aspects provided in its September 2023 circular. This article intends to trace the extant laws around it.


The SCORES platform was started to primarily enable investors to lodge and monitor their complaints and track the status of such complaints. Things have come a long way from 2018, when initially even complaints received in physical form were digitized by SEBI and uploaded on the SCORES platform. Subsequently a master circular issued in December 2022 (“Master Circular”) encouraged filing of direct complaints through the SCORES platform rescinding earlier circulars in relation to disputes mechanism and timelines for a response remained within 30 days.


In order to expedite the resolution timelines, the Securities and Exchange Board of India (Facilitation of Grievance Redressal Mechanism) (Amendment) Regulations, 2023[1] (“Amendment Regulations”) was notified on August 18, 2023. These regulations made significant changes to several existing regulations such as: SEBI (Stock Brokers) Regulations, 1992, SEBI (Merchant Bankers) Regulations, 1992, SEBI (Debenture Trustees) Regulations, 1993, SEBI (Collective Investment Schemes) Regulations, 1999, SEBI (Research Analysts) Regulations, 2014. The significant changes brought forth by the Amendment Regulations include:

1.     The Amendment Regulations shortened the time duration for redressal of complaints from entities from 30 days to 21 days; and

2.     The Amendment Regulations empowered SEBI to recognise a body corporate for handling and monitoring the process of grievance redressal.


SEBI issued another circular on September 20, 2023[2], effectively to also substitute the Master Circular. This September circular introduced significant procedural changes. For example, investors are mandated to take up their grievance with the concerned entity before filing a complaint on SCORES. (this does not take away their right to use SCORES to submit their grievance directly to the listed companies/ intermediaries for resolution.) Entities are to resolve the Complaint and upload the Action Taken Report (ATR) on SCORES within 21 calendar days of receipt of the Complaint. The ATR of the entity will be automatically routed to the complainant.


The investors are also required to file a Complaint on SCORES within one year (where earlier this was a 3 year limitation period) from the date of cause of action, in order to enhance accuracy in the redressal of grievance, where (a) the complainant has approached the entity for redressal of the complaint and the entity has rejected the complaint or the complainant has not received any communication from the concerned entity; or (b) the complainant is not satisfied with the reply received or the redressal by the concerned entity.


It may be noted that SEBI had also vide a circular introduced online conciliation / arbitration as a dispute resolution mechanism details of which can be obtained from a master circular of August 11, 2023[3]. Consequently, investors have an additional approach for grievance redressal.


On December 01, 2023 however, SEBI issued a circular extending the timeline for implementing the provisions of the circular notified on September 20, 2023[4] (“Extension Circular”). Via the Extension Circular, SEBI notified the effective date of the September circular as April 01, 2024. Accordingly, the Master Circular shall stand rescinded only with effect from April 01, 2024. However, it has been clarified that the entities shall continue to submit the ATR on SCORES within 21 calendar days from the date of receipt of the complaint.


This post has been authored by Siddharth V.V , consultant, and Nishtha Singh, a final year student at Amity University, Lucknow. Views expressed if any are their own.

 

Footnotes


[2] Redressal of investor grievances through the SEBI Complaint Redressal (SCORES) Platform and linking it to Online Dispute Resolution platform, available at: https://www.sebi.gov.in/legal/circulars/sep-2023/redressal-of-investor-grievances-through-the-sebi-complaint-redressal-scores-platform-and-linking-it-to-online-dispute-resolution-platform_77159.html


Comments

bottom of page