Legal base for regulating investment adviser activity finalised

The Bank of Russia has set the requirements for investment adviser activity and the procedure for the accreditation of computer programmes that are used to give individual investment recommendations. The corresponding regulations were registered by the Ministry of Justice.

The requirements stipulate that an investment adviser should give advice in accordance with their client’s investment profile determined based on the information obtained from the client and recorded in a special document.

To compile the investment profile, the adviser needs to have information about the client’s age, education, average monthly income and expenses for at least 12 months prior, and their amount of savings (if any). Should the investment adviser become aware of any changes in the information used to compile the existing investment profile, a new profile must be drawn up.

Investment advice, in turn, must be provided in a recordable form, i.e. orally with an audio recording or in the form of a written document signed by the investment adviser.

Moreover, a number of requirements for the activity of investment advisers were adopted that are aimed at protecting clients’ interests and include monitoring their client’s portfolio, settling conflicts of interests, and document storage.

In accordance with the adopted norms, autoadvisory (robo-advisers) and autofollow programmes used in individual consulting must be accredited by the Bank of Russia or a self-regulatory organisation if such authorities are vested in it. Persons that are authorised to request accreditation as well as the list of documents to be submitted are also determined by the accreditation procedure requirements. In addition, the procedures for providing, refusing to provide and revoking accreditation are also stipulated.

The Bank of Russia regulations are to become effective on 5 March 2019.