SEBI Issues Master Circular on Investor Grievance Redressal through SCORES Platform
Moneylife Digital Team 09 November 2022
Market regulator Securities and Exchange Board of India (SEBI) has issued a master circular on the redressal of investor grievances through the  SEBI Complaints Redress System platform (SCORES) platform and said the option of one-time review is available in case the complainant is not satisfied with the grievance resolution. SCORES is an online platform designed to help investors to lodge their complaints, pertaining to securities market, online with SEBI against listed companies and SEBI-registered intermediaries. All complaints received by SEBI against listed companies and SEBI-registered intermediaries are dealt through SCORES. The mobile app /website facilitates investors to lodge their complaints online with SEBI and, subsequently, view its status.
 
In the circular, the market watchdog said that in order to enhance ease, speed and accuracy in the redressal of grievance, the complaint shall be lodged on SCORES within one year from the date of cause of action, subject to certain conditions. SEBI clarified that the market regulator reserves the right to reject a complaint request on SCORES if it is lodged after a year of the cause.
 
The conditions would be that the complainant has approached the listed company or registered intermediary/ market infrastructure institutions (MII) for redressal of the complaint or the complaint has been rejected. Other conditions include that the complainant has not received any communication from the concerned listed company or the registered intermediary/ MII or, the complainant is not satisfied with the reply received or the redressal action taken. 
 
According to SEBI, it reserves the right to reject a complaint lodged on SCORES, if the date of cause of action is more than one-year-old and/or the complainant has not taken up the complaint with the concerned entity prior to the said date.  
 
“To enhance investor satisfaction on complaint redressal, a one-time ‘review’ option is also available under SCORES wherein a complainant, if not satisfied with the extent of redressal of grievance by the concerned listed company/ intermediary/ MII, opts for review of the extent of the redressal, within 15 days from the date of closure of the complaint on SCORES. Thereafter, the complaint shall be escalated to the supervising official of the dealing officer of SEBI,” the circular said.
 
Among other things, SEBI said that a complaint would be treated as resolved/disposed/ closed only when it disposes/closes the complaint in SCORES.”Hence, mere filing of ATR (Action Taken Report) by a listed company or intermediary or MII with respect to a complaint will not mean that the complaint is not pending,” it noted. In terms of handling of complaints, the listed company concerned should respond within T+30 days and if there is no response within that period, then the listed company would be alerted. Further, response has to be obtained in T+60 days.
 
 
‘T’ refers to the day complaint is received in SCORES by the listed company. For non-compliance, the stock exchange can issue notice to the listed company concerned intimating about a fine of Rs1,000 per day per complaint. In case, there is no resolution of complaints and non-payment of fine to the stock exchange within T+61 days, then notice would be issued to the promoters concerned, as per the circular. Also, promoters’ shareholdings can be frozen in case there is no resolution after T+86 days.
 
“Once stock exchange has exhausted all options and yet the number of pending complaints exceed 20 or the value involved is more than Rs10 lakh, the exchange (has) to forward the details of such listed companies to SEBI for further action, if any,” the circular said.
 
Fewer Complaints Received On SCORES This Fiscal Year
 
The market regulator has received fewer complaints on average so far this year, despite monthly grievances rising from their June lows. According to data shared by SCORES, SEBI received an average of 3,011 complaints every month so far in the financial year 2022-23 (FY23). Further analysis shows that there is a 15.4% decline over the 3,558 average monthly complaints in FY21-22. The average monthly figure was higher in FY20-21 (4,906), FY19-20 (4,627) and the pre-pandemic year of FY18-19 (3,517).
 
The number of investors has risen significantly since then. There are now over 100mn (million) investor accounts compared to 40mn in FY18-19.
 
The number of days it takes to resolve a complaint has dropped from 36.8 days in October 2021 to 29 days as of September 2022. The lowest average resolution time was in April 2022 when it hit 24 days.
 
The system often addresses complaints by forwarding it to the entities against which investors are filing complaints. The concerned entities are required to send a written reply to the investor and file an action taken report in the complaint platform.
 
The securities appellate tribunal (SAT) observed in a 2019 order that.... “complaints filed on the SCORES platform has been disposed of without deciding / settling the issue that was raised in the complaints. Thus, disposal of the complaints by the respondents on the SCORES platform is no disposal in the eyes of law. It is merely an eye wash without disposing of the complaints and without settling the controversy involved in the complaints.”
 
“Such computer generated disposal of a serious complaint speaks volume on the conduct of the respondents in treating the minority shareholders in this shabby manner,” added the order.
 
The regulator had moved the Supreme Court against the order which diluted some of the observations. “May be there was some remiss on the part of SEBI to act as a regulator, but casting aspersion was not warranted in the facts and circumstances of the case,” said the Supreme Court order.
 
The majority of investor complaints are against stockbrokers, according to yearly data from the SEBI annual report. There were 11,261 complaints filed against stockbrokers in FY21-22. The next biggest source of complaints were issues related to refund, allotment, dividend, transfer, bonus, rights, interest and redemption matters which accounted for 6,789 complaints. Registrars to an issue and share transfer agents were the source of 3,877 complaints; mutual funds were next with 3,866 complaints; followed by depository participants with 3,794 complaints.
 
“Of the 42,694 new complaints received during 2021-22, 37,425 complaints (or 87.2% of the total complaints) were e-complaints, while remaining 5,460 complaints (or 12.8% complaints) were physical complaints,” noted the 2021-22 SEBI annual report.
 
The largest number of complaints were received at the head-office and accounted for nearly half the investor complaints received. The northern region (which includes Delhi and others) was second and accounted for nearly a fifth of complaints. This was followed by the western region (14%) excluding Daman and Diu as well as Maharashtra and including states like Gujarat and Rajasthan. The remaining complaints came from the southern and the eastern regions.
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