SEBI directive to AMCs to disclose investor complaints is a misdirected diktat

SEBI’s new rule asks mutual funds to disclose a summary of investor complaints, but investors almost never complain directly to AMCs. Most complaints are resolved by mutual fund agents

Market watchdog Securities and Exchange Board of India (SEBI) had yesterday asked all asset management companies (AMCs) to disclose investor complaints on their respective websites as well as in their annual reports in a bid to protect investor interest and bring in more transparency. Fund houses have been asked to disclose last year’s complaints by 30 June 2010. The disclosure includes the type of complaints and whether they are resolved or pending.

Although SEBI’s intentions are sound, it is unlikely that the move will do much good for investors. While some financial experts believe that this move will increase accountability on the part of fund houses, others say that it won’t have a major impact and will only increase compliance work.

Rajesh Jha, CEO, Jain Investment told Moneylife, “Six months back, there was some problem with CAMS back-up of one of the AMCs. In one month there were some 400 complaints against that AMC. It was a specific problem and we sorted it out with their operations head.” He added, “There are very few people who go on the AMC site and register complaints. Most of the complaints are resolved by our back-office team. We resolve it through the registrar or AMC. A majority of the complaints are resolved through us.”

Distributors say that complaints registered with them are mainly fundamental complaints related to dividend payments, delay in dispatching account statements, incorrect address, redemptions and problems with systematic investment plans (SIPs).

“The complaints are pertaining to service, but the larger issue is not about servicing; it’s about mis-selling. A fund house cannot be held responsible for mis-selling. They are the manufacturers. Generally all fund houses’ services are good. The main intention of SEBI is to curb mis-selling. AMCs have a limit to which they can handle investor complaints. Most top-rung investors are left high and dry when there is nobody to service them. So they approach us. Most investors don’t have time to complain to fund houses. We sort their complaints without charging anything so that we retain our clients,” said Vivek Rege, MD, VR Wealth Advisors Pvt Ltd.

Speaking about the directive, Harish Mohan, MD, Time Financials said, “It’s a good move but just registering a complaint doesn’t solve the problem. I have sent emails to each and every AMC for which I don’t have any reply from their end. I am not sure whether it will be registered on their website. Nobody is taking responsibility. I send complaints to the relationship manager (RM) of the fund house. If the RM does not escalate it to the next level it may not get registered.”

From what experts are saying about the move, it appears that SEBI is barking up the wrong tree instead of going into the root of the matter.




7 years ago

Mr Bhave should look personally to investors complainst about exchange brokers and should ensure that they are solved time bound-if he can do this then he should ask about MF complainst which are very tiny and very easily solved by brokers with AMC or Registrar-
i dont understand why Boss is so botheerd abt MF investors?
what are his intentions?
is he really bothered? or he wants to benifit some others by eliminating MF industrty?
my complaint to SEBI wwas unheared for 2 months-( TWO MONTHS)it was resolved after i forwared to Madam SUCHETA and she forwared to SEBI officer-
i dont know fate of other complaints to SEBI-
but i can guess-what could have been their situation looking to my case-which i fought for so long-
Thanks madam sucheta-my complaint has been solved now


7 years ago

The main problem lies with R&T staff. But that doesnt mean the AMC's can go scott free. AMC's have responsibilities and are suppose to have exclusive staff to monitior the performance of the R&T. I feel Sebi has been right in doing this.

BSE steals a march over NSE in mutual fund volumes

Both exchanges launched their much-hyped mutual fund trading platforms around the same time last year. Since then, volumes on the BSE have far outstripped those on the NSE

Bitter exchange rivals Bombay Stock Exchange (BSE) and National Stock Exchange (NSE) have been at each others’ throats for grabbing a larger share of the cash and derivatives segment in equity trading. It seems another battle is playing out on the newly-promoted mutual fund platforms of both exchanges.

However, the BSE appears to have hit the road running while its bigger rival is desperately trying to play catch-up. BSE has witnessed a sharp spike in trading volumes over the past few months. NSE, on the other hand, has remained mostly stagnant during this period. For the month of December 2009, when BSE StAR MF was launched, subscriptions touched Rs11.61 crore, with net inflows of around Rs4.43 crore. Comparatively, NSE’s MFSS platform registered a turnover of only Rs2.77 crore, with net inflows amounting to Rs1.85 crore.

Volumes on BSE StAR MF have surged by 82%, touching Rs21.19 crore by the end of April this year. On the other hand, volumes on NSE MFSS have witnessed a dip of 13%, touching Rs2.42 crore in April. While net inflows on BSE have jumped 268% to Rs16.30 crore during this period, NSE has barely managed an 18% rise amounting to Rs2.19 crore.

While the NSE was the first to jump into the fray when it launched its NEAT system based MF platform—Mutual Fund Service System (MFSS) on 30th November last year, the BSE followed closely on its heels by opening its Web-based trading platform—BSE StAR MF—on 4th December.

Why is it that NSE is so far behind its smaller competitor in this segment, when it enjoys an enviable market share in the equity derivatives segment?

Lack of adequate participation from brokers has probably hurt the NSE in its new venture. Some technical and operational issues have tipped the scales in favour of the BSE platform.

Chandrashekhar Layane, vice president, Fairwealth Financial Services, revealed that brokers prefer the BSE platform due to its comparative ease of use and flexibility. “Brokers favour the BSE platform because it is much more user friendly, not only in terms of technology but also in relation to operations.”
Deena Mehta, managing director, Asit C Mehta, believes that BSE enjoys a first-mover advantage in terms of providing a Web-based Internet platform. “When BSE launched its service, it started with a Web-based Internet platform straight away. Brokers could log in from anywhere and put in the trade. On the other hand, NSE started with its NEAT system. Hardly any broker now has NEAT terminals. We have shifted to Orion terminals. So having a direct connectivity with NSE was not workable.”

Ms Mehta also pointed out that BSE also offers a back-office solution, which facilitates billing and other tasks. “Otherwise, we would have to develop our own back-office software, which takes a lot of time and involves costs. Since BSE has already provided for technological compatibility, it is a lot more convenient for us,” added Ms Mehta.


Govt confident of introducing GST by 1 April 2011

The earlier deadline of introducing GST by this fiscal could not be adhered to after the States and the Centre could not agree on its structure

The empowered committee of States today exuded confidence that the Goods and Services Tax (GST), proposed to replace most indirect taxes in the country, will be implemented from next fiscal, a new deadline after the earlier target was missed, reports PTI.

"That is our target and we will make all efforts to meet the target... We are confident," committee chairman Asim Dasgupta told reporters after meeting finance minister Pranab Mukherjee.

The earlier deadline of introducing GST by this fiscal could not be adhered to after the States and the Centre could not agree to its structure.

While States propose two main rates for goods and one rate for services, the Centre pitched for one rate for goods and services.

In the Budget, Mr Mukherjee had also said, "It will be my earnest endeavour to introduce GST along with DTC in April 2011."

The committee, comprising State finance ministers, would now meet on 21st May on the issue of GST.

"The next meeting of the empowered committee of state finance ministers has been convened on 21st May. As a preparation for that meeting, we needed to have some interaction with the Union finance minister, which we did today," Mr Dasgupta said.

He said the meeting next Friday will discuss relevant matters for implementation of GST.

When asked whether the meeting will take up the issue of Rs50,000 crore for States to meet losses due to switching over to GST as recommended by the 13th Finance Commission, he said all relevant issues will be discussed.

GST is expected to replace excise, service tax at the level of Centre and VAT and other local levies at the States’ end, besides cesses and surcharges.


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