Investor protection through Investor Grievance Redressal Mechanism at SEBI

A dynamic and efficient capital market is a vital and indispensable part of a nation‘s financial infrastructure. Indian stock market is the fourth best-performing market in the world. Retail investors account for nearly 97 per cent of total investors in Indian mutual funds accounting for nearly 47 million investor accounts. Resolution of securities market dispute could result in lowering the cost of equity/capital in the country. Secondly, dispute resolution platform provide a feedback mechanism of the regulation in the securities industry- which regulation is working, not working but needs fine-tuning. It is in this context, we examine the role and efficacy of SEBI‘s SCORES securities dispute resolution system using the widely used three attributes of a good dispute resolution system: accessibility, efficiency and fairness As far as the first criteria are concerned- accessibility to investors- SCORES fare very well. It is overzealous in accepting customer complaints. On the flip side, given the overtly inclusiveness of the SCORES system, it has the potential to create a number of ―hard-to-solve‖ cases with weak information set which can impact adversely the reputation of the regulator. SEBI‘s SCORES model is a unique model and could be characterised as ‗advocacy model‘ with investors interest in the forefront. As far as the second attribute is concerned, viz., efficiency, SCORES system also fares favourably. The redressal rate at 96 per cent in recent years is one of the highest among regulators world-wide. Similarly, the time taken also scores positively (less than a year). Most of the cases get resolved in the initial stages itself. To improve the redressal rate further, it is recommended that an active mediation role as opposed to conciliation rule may be played by the regulator.