Sucheta Dalal :SEBI directive to AMCs to disclose investor complaints is a misdirected diktat
Sucheta Dalal

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

May 14, 2010

 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. — Ravi Samalad


-- Sucheta Dalal