Highlighting the key issues faced by the mutual fund distribution community, Federation of Independent Financial Advisors (FIFA) has submitted a letter to AMFI requesting them to address distributors concerns on an urgent basis.
Dhruv Mehta, Chairman FIFA said that the federation aims to highlight difficulties faced by distributors at the ground level. He said, “Somethings are not in control of distributors. We have received feedback from our members that there has been a delay from an RTA’s end to update KYC details of his client. Given the tight deadline to complete the pending KYC cases, we cannot afford to lose business due to such issues. Hence, we have requested AMFI to consider our feedback.”
FIFA has made a list of issues based on the feedback received by the members:
- In a few instance, NRIs or some investors are reluctant to share their documents required to complete their KYC by stating that they have not received any communication from AMC. While AMFI has asked AMCs to send a written communication to investors with pending KYC or PAN, AMCs should clarify that non-compliance could affect redemption or dividend payouts
- AMCs should mark a copy of such communications to distributors so that they can follow up with their clients
- RTAs should be mandated to update KYC/PAN details of clients received through distributors on an urgent basis. Any delay from RTAs should attract penalties or regulatory action
- A confirmation on KYC status of clients after submission of documents should be shared by RTAs to the respective distributors
- There should be integration of KYC at an industry level. For instance, there are cases where a client is already KYC/PAN complaint with other AMC. The industry should be able to map PAN/KYC in such cases
- KYC is rejected due to mismatch in name due to use of suffix such as ben, bhai or kumar.
- There are instances where KYC is rejected due to signature mis-match on the copy of pancard. Since most of these folios were opened 15 years ago, there can be a change in signature. The industry should approve KYC based on photocopy of PAN
- A small amount invested way back by investors has grown to sizable corpus now. However, such investors are wary of providing PAN as they fell it would be subject to income tax scrutiny. A clarification from tax experts will help investors
- Update distributors through media or notification on status of action plan followed by RTAs and AMCs
