Grievance Redress Mechanism: formula sheet

Key formulas

Core duty

Registered adviser → must have a grievance redressal mechanism and deal with client complaints

This is the base rule. Options that say complaints can be ignored or left to the client to take elsewhere are wrong.

Internal sequence

Receive → Record → Examine → Reply → Escalate if unresolved

Use this order to eliminate options that skip recording or replying.

Escalation point

Unresolved or serious complaint → compliance officer / senior management

The compliance officer oversees regulatory compliance. They are not a substitute for replying to the client.

Record keeping

Every complaint and its resolution → documented and retained

Records support inspection by SEBI. Exact retention periods should be checked in your workbook.

After internal redress

Client unsatisfied → SCORES / ODR / arbitration

Internal redress does not take away the client's right to approach external forums.

Full form

SCORES = SEBI Complaints Redress System

Web-based and centralised. Also available through a mobile app.

ATR timeline under SCORES 2.0

Action Taken Report due within 21 calendar days of the complaint reaching the entity

Calendar days, not working days. The older system allowed 30 days, so watch for that as a trap option.

Escalation order

Entity's own grievance channel → SCORES complaint → review by higher level → ODR

Know the sequence. Check the latest SEBI circular or NISM workbook for exact review-level timelines.

Who responds

The entity complained against uploads the ATR on SCORES

The investor does not write the ATR. SEBI does not replace the entity's reply.

Escalation order

Intermediary → SCORES → ODR (conciliation → arbitration if conciliation is not successful)

ODR can be invoked after the intermediary and SCORES routes if the investor remains dissatisfied. Do not pick ODR as the first step in an exam question.

Conciliation timeline

Time limit prescribed by SEBI's ODR circular, with a possible extension

The exact number of days, any extension and the start point are set in the current SEBI Master Circular for ODR. Confirm them in the latest circular before your test.

Arbitration timeline

Time limit prescribed by SEBI's ODR circular, with a possible extension

Arbitration has its own limit, separate from conciliation. Confirm the current days, extension and start point in the latest circular. Do not apply one stage's limit to the other.

Nature of outcomes

Conciliation = voluntary settlement; Arbitration = binding award

Conciliation needs both parties to agree. Arbitration gives a decision, binding subject to appellate arbitration and challenge under Section 34 of the Arbitration and Conciliation Act, 1996.

Arbitration

Neutral arbitrator hears both sides → gives a binding award

Decision is imposed. Exchanges run it for investor versus trading member disputes.

Conciliation / mediation

Neutral helps parties → parties agree own settlement

No decision is imposed. Outcome binds only if both parties agree.

Investor Protection Fund

Exchange-maintained fund → compensates eligible investors on member default

A compensation fund with limits, not a hearing forum.

Securities Appellate Tribunal

SEBI order → appeal to SAT → on law, Supreme Court

Appeal route against orders, not a place to file a first complaint.

Quick revision

• A client's first step is normally to complain to the investment adviser.
• The adviser should have a defined internal process to receive and resolve complaints.
• Keep records of every complaint and how it was resolved.
• SCORES is SEBI's online platform for investor complaints.
• SCORES is used when the complaint is not resolved at the adviser level.
• ODR is the online dispute resolution route for unresolved matters.
• Arbitration is a formal, binding way to settle a dispute outside regular courts.
• Other avenues include legal remedies available under law.
• Know the order: adviser, SCORES, ODR, then arbitration and other avenues.
• Check the workbook for exact timelines and do not guess them.

Common mistakes

• Thinking a verbal reply is enough Fix: Remember that every complaint must be recorded and its resolution documented.
• Treating the compliance officer as the first receiver of all complaints Fix: The firm's mechanism receives and handles the complaint. The compliance officer is the escalation point for unresolved or serious cases and monitors compliance.
• Choosing 30 days as the ATR timeline. Fix: Under SCORES 2.0 the ATR is due within 21 calendar days. Treat 30 as a trap.
• Counting the timeline in working days. Fix: The timeline is in calendar days. Weekends and holidays count.
• Treating ODR as the first step for any complaint. Fix: Remember ODR is the later stage. First the intermediary, then SCORES, then ODR.
• Saying SCORES and ODR are the same platform. Fix: SCORES is for lodging and tracking complaints. ODR is for formal conciliation and arbitration through ODR institutions.
• Saying conciliation gives a binding decision like arbitration. Fix: Arbitration decides through an award. Conciliation only helps parties settle.
• Treating SAT as the first place to file an investor complaint. Fix: SAT hears appeals against SEBI and similar orders. Complaints start with the intermediary or SCORES.

Exam tips

• Questions are usually principle-based: have a mechanism, record, reply, escalate. Master the sequence.
• Watch for absolute words such as never, only and always in options.
• Link this topic with SCORES, ODR and code of conduct questions, since options often mix them.
• Check your latest workbook for any exact timeline before the exam. Leave a question blank if you are guessing between two numbers.
• Memorise 21 calendar days for the ATR and treat 30 days as a trap.
• Link each stage to its actor: investor lodges, entity files the ATR, reviewers escalate.
• SCORES 2.0 questions often test features: auto-routing, auto-escalation, review and monitoring.
• Know that ODR comes after SCORES. Study both topics together.