Blacklisting of your relationship manager is going to be a reality now

Blacklisting of your relationship manager is going to be a reality now

Target oriented advisers have been mis-selling mutual funds to gullible investors, of whom many are the first timers. Such practices have resulted in fizzling interest of retail investors in taking mutual fund route. Being concerned over this, the Securities and Exchange Board of India (SEBI) has decided to come down heavily on those who mis-sell. In September 2012, SEBI issued an order to Association of Mutual Funds in India (AMFI) to allot unique identification number to all employees, relationship managers and all other salesmen who sell mutual fund products. Till now it was relatively difficult to catch hold of the one who really perpetrated the mis-selling. And now, June 2013 has been the deadline for complying with the requirement of allotting Employee Unique Identification Number (EUIN).


The allotting EUIN would help bring down the malpractices while selling financial instruments. You see, employees of banks and other distributors have been quoting the AMFI Registration Number (ARN) till now for being able to claim commission; and apparently they are always under pressure to garner greater business. This leads them to mis-sell.This initiative will  hold them personally responsible for their advice would go long way in protecting investors' interest. For them it would be detrimental now to mis-sell since it would be easy to nail them down.

By introducing EUIN, SEBI has taken a one more step in the direction of rooting out mis-selling. Early this year, SEBI had issued (Investment Advisers) Regulations, 2013 enunciating requirements related to obtaining a certificate of registration, qualification, capital adequacy, period of validity of the certificate, and has also mentioned other general obligations and responsibilities on the part of investment advisors.