Unethical poaching games by fund distributors

Following the implementation of the new trail commission rules, some fund distributors are getting cleints to sign a changeover without their explicit consent

Following the Securities and Exchange Board of India (SEBI) direction to the Association of Mutual Funds in India (AMFI) to implement the new trail commission rules, a number of distributors are trying to snatch away clients from each other. However, this game is leaving the investor clients in a lurch.
According to an independent financial advisor (IFA), investors are lured into signing a form for changing their sub-broker under different pretexts.

“Following the core banking initiatives that require 11-digit account numbers, agents of a financial advisory firm asked investors to change their account numbers. They even offered to do it free of cost for the investors saying that unless they update their account number, their redemption amount or dividend may be transferred to someone else’s account. The investor clients are asked to sign a transaction form which prominently displays the bank account number but conceals the ‘change in sub-broker’ column that is placed at the bottom of the form,” the IFA revealed.

According to unconfirmed reports, UTI and DSP BlackRock carried out a check on the forms received by them pertaining to change of broker. When these two asset management companies called their investor clients, what they found out was shocking. Out of every 10 customers, six were not even aware of any mandate like this (the change of sub-broker).

This brings to light that most investors have not read the fine print before signing the dotted line and were literally duped into entering into a false contract. So be careful the next time, while signing any documents, especially one from a fund distributor or financial advisory firm.

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    1 decade ago

    Easy to blame everything on the brokers, IFA's & everyone else. But wasn't these issues bought up long time before the no entry rule coming in. still the regulator like some dumb JACKA** wanted to play the unfair game. I don't see how this rule has benefited the common man. More black money getting infused in the system. More of dirty tricks being played & even more useless gossip


    1 decade ago

    In a country where mass 98% don't know what is mutual fund there every thing could be possible.
    Now we are listening that mutual fund can be buy through stock exchange mechanism & a 350000 terminal will be very soon available to promote the mutual fund even in most remote part of our country.Alas again that cruel 98% figure flashing.Day or night whats the difference to
    a blind person.Its not like a rice-wheat-sugar that price is cheap jump to buy,uff..again that 98% idiots of our society.To sum up who will enter in a broker terminal to buy mutual fund units in morning its guaranteed that in the evening that person will return home with pretty stocks in his portfolio & not mutual fund.Idiot 98%...& super idiot market regulator the worthless pan chewing sarkari babus...

    R Balakrishnan

    1 decade ago

    In many cases, IFA's are looking to sell out their existing AUM to big distributors. One of the large distribution houses, linked to an industrial house, has been'buying' clients of IFA's. Anyways, any distributor of financial products has no business to complain about 'ethics'


    1 decade ago

    SEBI has given free hunting and killing ground of IFA's by big players like NJ,Prudent and offcourse banks-who use all tricks and technology to influence clients-but at a very high cost-and often misguiding clients-they put client in such a condition like GALE KA FANDA-rope tightend to neck-which client recognises later but cant get out-like switching of open ended schemes to tax savers-to earn more upfront and guaranteed trail of 3 yrs-this is all done by big players-bcos they want money at any cost-they dont bother to retain client-by proper advice-but still is sleeping SEBI over all ground facts-IT SEEMS IN A YEAR ALL IFA'S WILL BE VANISHED AND ONLY BIG PLAYERS WILL HANDLE WHOLE MF INDUSTRY LIKE PUPPETS IN HANDS OF THE KATHPUTLI MASTER.

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