Mumbai, Mar 9: The mutual funds industry should adopt self-regulation and safeguard against misselling of products to investors, market regulator SEBI said.

"I am sure the mutual funds industry will take sufficient steps of self-regulation and to see that SEBI does not have to step in," SEBI's newly-appointed Chairman CB Bhave said while speaking at a function here.

Selling of products without explaining the details, including the likely return, is referred as misselling.

The mutual funds industry should be able to regulate its distributors in a manner that investors do not have to complain that the products were mis-sold to them, Bhave said.

With the derivatives markets taking off, complaints are being heard from investors that derivative products have been offered without the complexity of these products being explained to them properly, he said.

"As India integrates more and more with the world, and with our markets getting more sophisticated, we will see more complex products for investment available," he said, adding understanding the risks inherent in these products will become increasingly important.

Bhave asked the mutual funds industry to tap the market not only in the metros but also in the hinterlands

"There is a market out there, which is untapped. This is a challenge for all of us as to how to reach this market. We have to see that the message is delivered in a language the investor understands," Bhave said.

MF industry body AMFI's chief A P Kurian, who also spoke at the function, said there was a need to change the mindset of the people and make them more aware of the opportunities available in MFs.