Indian mutual funds sector setting benchmarks for transparency, professionalism

Grievances and complaints from various stakeholders can make or break any industry and any sector. The good thing is that when it comes to the Indian mutual funds industry, the number of grievances and complaints from investors and distributors for the half-year ending September 30, 2023, has gone down significantly compared to the previous year. Little wonder that it stands out in the financial market and the fewer customer complaints reflect its transparent and disclosure-focused reporting practices. For the records, there were only 485 complaints from investors and distributors for the half-year ending September 30, 2023 as per the data of the Association of Mutual Funds in India (AMFI). Of these, 428 complaints were received directly, while 57 complaints were received through SEBI. The total number of complaints received in the 1st half of FY 2022-23 was 619, of which 494 were received directly from investors and distributors and the remaining through SEBI. Incidentally, AMFI is dedicated to developing the Indian mutual fund industry on robust professional, healthy and ethical lines in order to consolidate standards across areas with a view to protecting and promoting the interests of mutual funds and their unit holders.

Interestingly, for the same period, the net AUM (asset under management) increased from Rs, 41,61,821.62 crore in April 2023 to Rs, 46,57,755.22 crore by the end of September 2023. This was mostly driven by favourable conditions, including a strong equity market, steady interest rates and a steady economic growth. So, while the industry is growing at a fast clip, the data suggests that complaints against the MF industry are low. This could be attributed to the industry's continuous efforts to elevate service quality and transparency and building a stronger foundation of trust among investors. AMFI received complaints from investors as well as distributors directly and that are broadly classified into routine and serious complaints depending on the type and their nature. While the overall grievance against the industry and its distributors continues to remain miniscule, and is at the bottom of the table as regards customer complaints are testament to the mutual fund industry's unwavering commitment to investor protection and satisfaction. AMFI remains dedicated to fostering a transparent and trustworthy environment for mutual fund investors.

Everyday grievances typically revolve around issues such as missing dividend payouts, absent account statements, commission delays and outdated records. On the other hand, critical complaints encompass more severe infractions like application form manipulation, unethical marketing practices, fund irregularities, and significant service lapses by the distributors. When it comes to addressing these concerns, standard complaints are promptly directed to the respective mutual fund companies or distributors direction early disposal with the required guidance from AMFI. However, in cases that are deemed serious, explanations are demanded within a specific time-frame. Following this, matters are pushed to AMFI’s ARN committee, which evaluates and advises on suitable actions, ranging from commission suspension to potential termination of ARN licenses. Therefore, it would not be a tall order to expect that the number of grievances and complaints would come down even further, going forward.