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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