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With Parliament passing a new insurance Act, the stage is being set to make the Securities Appellate Tribunal (SAT) an umbrella appellate authority for all financial markets.
Currently, SAT is an appellate tribunal for only orders issued by the Securities and Exchange Board of India (Sebi) and the Pension Fund Regulatory and Development Authority. It has now been empowered to be an appellate tribunal for insurance cases.
And, the Finance Bill for 2015-16 has proposed merging the commodity markets regulator, Forward Markets Commission, with Sebi. With SAT as appellate authority for commodity-related regulatory decisions.
Put another way, before the financial markets’ regulators merge, and a single regulator for all financial services is set up, a unified appellate authority is taking shape. Once the legislations mentioned take full effect, only banking would be out of SAT’s ambit. That sector has an ombudsman mechanism.
SAT was set up under the Sebi Act and is a three-member body, chaired by a retired high court judge. Some further legal changes are necessary. Vyapak Desai, partner, Nishith Desai Associates, says: “Section 15T and related sections of the Sebi Act may be required to be amended to expand the scope of its jurisdiction.”
The insurance sector has been waiting for an appellate authority and many cases would come soon after the the amendments are effective. The chief executive of a private life insurer said for SAT to deal with cases from the sector, it needs an expert with the background on its board.
Im any case, when all four financial services come under SAT, the authority might need to be expanded. Desai said wit the expected increase in case load, there would be a need to set up more benches of SAT, in Mumbai or in other parts of India. The FInancial Sector Legislative Reforms Commission had proposed all financial services under one regulator and a single Financial Services Appellate Tribunal, covering banking, too. A task force set up by the government is looking at this recommendation. If it goes ahead with this, SAT would be the focus.
