In your interest.
Online Personal Finance Magazine
No beating about the bush.
Well begun is half done. Is the Essar Group being too clever by half?
Corporate advertising is probably the toughest, the most challenging of all forms of advertising. How does one distil an entire organisation’s core philosophy and encapsulate it in one single piece of communication, and even more trickily, in one single slogan? Especially when it comes to a giant, multi-business, multi-brand, multi-layered, complex organisation. Plus, you have various operating heads to please, each with demands and expectations of their own. In contrast, for a brand communication, life is a lot simpler. Once the key benefit and insight is in place, half the battle is won. But to communicate an organisation’s core competence in thirty seconds is another ball game. And yet, it needs to be done.
Essar Group, the giant desi organisation, which deals in various businesses across the continents, in core sectors such as energy, steel, power, communications, shipping… the list goes on, has released a new corporate campaign called ‘Let’s begin’. The objective of undertaking a corporate exercise is understandable for this particular group. So far, Essar has been a silent giant, going about its business in essentially a low-key manner. But as the group undertakes to expand and grow, it becomes important to establish a distinct identity in the consumers’ minds. The core message of their campaign is this: "Every achievement is not the end of a journey. It's the beginning of a new journey. So let’s begin.”
Although it’s not in the league of a Nike’s ‘Let’s do it’, I actually quite like the ‘Let’s begin’ slogan. The phrase is mildly self-deprecating (and therefore classy, coming from a successful organisation that has been around for a long time). And the concept is pregnant with many possibilities. One can visualise stunning creatives being born out of the thought.
However, their execution of the idea is pretty lacklustre, dull and entirely boring. Funnily enough, for a thought that’s self-deprecatory, they’ve released a TV commercial that’s totally self-obsessed! The commercial features a casually-dressed dude drawing complicated charts on a black-board, which criss-cross the organisation’s various disciplines (power, steel, telecom, etc). Guess the underlying message is: constant innovation. And to pep things up, so to speak, they have added zippy graphics and a shaky editing pattern, but it doesn’t work. The commercial, not helped much by a languid music track, appears like a corporate department head making some yawny internal presentation to his assorted bosses. In fact, the commercial is so irritating to watch, I am amazed the big bosses at Essar even allowed it to be aired!
Net-net: ‘Let’s begin’ isn’t a bad thought. Go back to the drawing board, people. Ask the ad agency chaps to leave the pub ASAP, and get back into their brainstorm rooms. ‘Let’s really begin’ should be your own internal slogan. We kinda don’t care much to watch your boardroom presentations in our living rooms.
Axis Bank debited Rs225 as ‘bank charges’ for the sale of its newly launched open-ended equity mutual fund, while Citibank used to do the same for insurance policies. Are the regulators aware of such things?
Marketing of mutual funds through banks might be an ultimate way of penetrating the larger geography considering the lenders’ reach and network. However, banks may not disclose the amount charged for commission that is deducted from customers’ accounts for a new fund offer (NFO).
This is exactly what has happened with many Axis Bank customers who had opted for Axis Mutual Fund’s NFO. The bank, using its channels, marketed the NFO and deducted Rs225 from the customer’s account under the name of ‘bank charges’, which in realty was commission for the NFO.
According to industry sources, many customers of Axis Bank who invested in the NFO were not even aware about this deduction or commission.
“If I approach someone for selling an NFO, I will ask for a separate cheque of Rs225 per Rs10,000 as my commission, whereas Axis Bank has the authority to debit the amount directly from its customer’s account. If I disclose that I am charging a commission to the investor then it is the fair method of doing a transaction. The Bank has deducted the commission under ‘bank charges’ rather than as ‘commission’. The customer doesn’t exactly know why the charges were deducted,” said an independent financial advisor (IFA) on the condition of anonymity.
Axis Mutual Fund and Axis Bank officials were not immediately available for comments.
The NFO from Axis Mutual Fund opened for subscription on 19 January 2010 and has raised as much as Rs905 crore, till date. Axis Mutual Fund also registered the highest average assets under management (AUM) for the month of January at Rs2,641 crore compared to Rs2,569 crore last month (December 2009).
This puts a different light on the entire issue on how distributors can charge their customers.
The regulator has recently banned entry loads. This has led to an overall slump in the growth of the MF industry. There is an intense debate on whether customers would pay for the advisory fees charged by MF distributors.
Axis Bank’s move underlines the fact that while it is laudable that customers must have the ability to decide for themselves what they are paying for and how, it is a utopian idea in practice. In reality, distributors who have a strong relationship with customers in some manner or the other and an ability to charge them, will get away by doing exactly that. Customers may neither notice nor protest.
In the current scenario, this means that commercial banks enjoy a relationship of trust with their customers. Nevertheless, banks have often abused that trust in the past when they have debited millions of customers for a service that they have not asked for. The most notable is the example of Citibank that debited some amount from its customers’ accounts for an insurance policy, the Suraksha scheme, which he/she did not explicitly consent to buy.
Citibank along with Tata AIG Life Insurance Co launched its insurance plan back in June 2001. There were no charges for the initial three months. During this period, the bank poached its credit and debit cardholders. Upon the completion of three months (31 August 2001), the credit card holders would automatically be registered into the insurance scheme.
The customers had no knowledge that they were being duped unless they would inform the bank to cancel the services on their own. Post 1 September 2001 all registered subscribers had to unnecessarily pay Rs204 annually for the services.
If banks continue to charge their customers without informing them, this makes a mockery of the Securities and Exchange Board of India (SEBI)’s principle that distributors must disclose to fund investors what they are charging and how. But SEBI does not regulate banks. Neither has SEBI any mechanism to regulate the distributors.
SEBI regulates fund companies; however, funds would not exactly be bothered by any abuse of trust by banks. They would be keen to raise as much money as possible—no matter how a distributor sells a scheme.
In this case, it becomes doubly ironic because the mutual fund is sponsored by the bank itself. Why would a fund complain about any malpractice? The Reserve Bank of India (RBI) would also not be concerned about customers being debited under ‘bank charges’.
In the end, banks may emerge as a major source of money for raising funds from investors by ‘using’ their ‘relationship’ and their power over the account (automatic debit) but this may not be what SEBI had in mind when it wanted distributors to disclose their fees separately.