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How to Rectify Mutual Fund Mistakes



Use the following guidelines to take remedial action and avoid errors in the future

 

Mumbai-based Investor had made a partial redemption request for 2,000 units in an open-ended equity fund. However, when he received the account statement, he realised that the AMC had redeemed only 400 units, worth `2,000, not the 2,000 units worth `1 lakh he had asked for. Meanwhile, the market crashed, eroding the NAV of the scheme he had invested in. He lodged a complaint with his distributor, who, in turn, brought it to the notice of the AMC. After a few days of heartburn and exchanging mails, the AMC corrected its mistake and redeemed the differential units at a historical NAV. A year ago, her switch request, from an ultra-short-term debt fund to an equity fund, was ignored. The Sensex was at around 18,000 at the time, but now that it is at a new high, she missed out on the big opportunity due to the switch request failure. However, the AMC refused to accept her claim and did not issue the units of the equity scheme based on the historical NAV .

Though the systems and processes have improved over the years, mistakes such as these keep occurring even today , be it at the level of the investor, distributor, AMC, registrar or the bank. Most of these problems occur because of the separation between the AMC and registrar, forcing investors to sort it out between the two. Sometimes the resolution becomes complicated due to the separation between the AMC and the registrar.

The problem can also be with the banking system, that is, if the bank does not transfer the money on time. Mutual funds can't issue units until the money is credited to their accounts if the investment amount is `2 lakh or more. Since there is little one can do to avoid mistakes made by others, we will concentrate on the possible remedial measures that can help you regain lost ground. However, note that if the mistake is at your end, you will have to take a hit.

The first step is to closely monitor all statements issued by the AMC and ensure that everything is in order. You need to be extra careful if you had made new requests regarding purchase, redemption or switch of funds. Act immediately if you see any discrepancies.

 

DOCUMENTS

Investors also need to make sure that the documentation is in order at their end to fight the agencies effectively. Keep a photocopy of the filled-form. Also, ask for a proof of acknowledgment. When you lodge a written complaint, attach copies of all relevant documents as proof. If you lodge a complaint over the phone, ask the complaint ID and note it down.

DON'T SIGN BLANK FORMS

While mistakes do happen at the level of distributors, that is, mutual fund agents or bank staff distributing mutual funds, the investor is also to be blamed if he or she signs a blank or incomplete form and hands it over to them. The buyer beware rule is applicable here.

APPROACH SEBI

If you are thorough with your documentation and act immediately, chances are that the issue will be settled at the AMC level. If this doesn't happen, approach Sebi, the regulator for mutual funds and the stock market. You can register an online complaint on the Sebi complaint redressal system, http: http:www.scores.gov .in. You will get an e-mail immediately , acknowledging the receipt of your complaint.

BANKING OMBUDSMAN

If the problem is due to the bank not transferring the money on time, you can take it up with the banking ombudsman. Here again, you can either approach the office of the ombudsman or lodge a complaint online at https:secweb.rbi.org.in BOprecompltindex.htm.

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