Account Aggregators got Green Signal by SEBI

It has been some time since you last invested in a range of stocks and mutual funds through a number of brokers and MF distributors. But you lack clarity. You finally arrive at the conclusion that you should start taking financial planning seriously. You hire the assistance of a financial expert to help you figure things out.

Your financial advisor would advise you to start by gathering more details about you and your previous transactions. They are interested in the things you do and invest in. As a result, you share the Excel document you prepared, feeling proud of your effort.

They sigh with disappointment after carefully analysing the spreadsheet, though. Nothing describes your financial strategy or transactional data. They claim that the data is inconsistent. They now want further information, including your risk profile, about you. The information regarding your investments must be verified by them. Your login information cannot be shared. Then you set out again to get all the data.

However, not all of your data is collected in one location. It is spread among numerous websites, including mutual funds and bank aggregators. Information about your other investments may be available to your insurance company, outside companies, mutual fund companies, and others. In essence, because manual assembly would be required, you can’t access your data from a single touchpoint.

What if a new strategy avoided all of these inconveniences? The same work will be done by Account Aggregators. The account aggregator framework acknowledged the capital markets regulatory authority SEBI on August 19. Customers will be able to communicate to financial service providers about their stock and mutual fund holdings due to the change.

Account Aggregator commonly referred to as “AA,” is a non-banking finance corporation (NBFC) regulated by the RBI, which facilitates the collection of financial data with the approval of the customer. They will establish links between “Financial Information Providers” (FIP), such as asset management companies or banks, and “Financial Information Users,” such as financial advisors, brokerage houses, etc.

Let us simplify this. 

The AA will first be asked by the FIU or financial advisor to provide all relevant investment information, including the most recent, real-time data.

The FIU or the financial advisor will request the AA to produce the relevant investment data, including the latest, real-time data. The AA will ask for your permission before sharing the report. After receiving the user’s approval, the AA will get in touch with the FIP or mutual fund companies and request that they supply all of the investment data. Prior to transferring the encrypted data to the FIU, the FIP will relay it in real time to the AA (your financial advisor). Never forget that AA is only a path nowhere and provides no freedom of knowledge.

And according to Sebi, “appropriate protections will be implemented in the IT systems of FIPs in the Securities Markets to guarantee that it is safeguarded against unauthorized access, alteration, destruction, disclosure, or dissemination of records and data.”

Additionally, FIPs are required to follow the code of conduct established in Sebi’s regulations, which includes responding to client complaints. The names of the account aggregators that FIPs employ must also be widely displayed on their websites.

This was a challenge to put together. After all, the ability of the sources of financial data to deliver information is a necessity for account aggregators to fulfill their duties. Several organizations should work together. While many banks and NBFCs have joined the framework, some participants have been less eager.

Therefore, the revelation of SEBI’s involvement in the account aggregator is significant. They may now pressure mutual fund companies and stockbrokers to join the account aggregator structure. The Reserve Bank of India’s financial service providers will be strengthened as a result of this measure. It might be revolutionary!

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