Ombudsman for stock market recommended

An ombudsman for stock market investor can be effective and efficient only if it is equipped with adequate infrastructure, manpower, and is also supported adequately by the law," according to M B Shah, chairman of the National Consumer Disputes Redressal Commission, New Delhi.

Shah was responding to one of the suggestions at a seminar on 'Dematerialisation: Investor Concerns' that the current system of arbitration should be replaced by an 'Investor Ombudsman'.

The two-day meet, held on Sunday, organised by the Consumer Education and Research Society (CERS) and the Bombay Stock Exchange (BSE). "The system of investor ombudsman should be fairly elaborate," the recommendation added," so that quick and inexpensive remedies are available at the investors' doorstep on the similar model of consumer forum and consumer commissions under the Consumer Protection Act (CPA), 1986."

Shah said the setting up of such an institution would not be effective without adequate supporting staff and necessary infrastructure as was the case with civil courts and consumer courts. The CPA is a mandate of the Parliament, which states, among other things, that matters should be disposed of within 90 days.

"The current state of affairs in most of the consumer courts is known to all," he added. "Are we having adequate, efficient, competent forum for consumers?" Shah adding that lack of infrastructure had created problems not only for consumers but also for civil courts and a number of tribunals. "Similarly, an Investor Ombudsman might not achieve much in such circumstances."

Shah asked, "Do shareholders have any right or control over depositories, where an estimated 7,00,000 crore shares are handled by the depository participants?" "What action can they take except arbitration? There are no provisions against depository participants' erroneous or fraudulent transactions or handling of the accounts."

He suggested that adequate protection can be provided to the investors only by putting proper law in place.