SEBI has asked all distributor channels to provide the necessary customer information to fund houses, finds team Cafemutual. Read for more details.
Mumbai: The Securities and Exchange Board of India (SEBI) said in a circular that it wants no payment to be made to the distributors if they do not complete the investor related documentation.
SEBI further said that no new folios/accounts should be opened unless all investor related documents including account opening documents, personal account number (PAN), know-your-customer (KYC) forms, specimen signature are available with asset management companies (AMCs)/registrar and transfer agents (RTAs).
The market regulator had earlier advised fund houses, through a circular issued on December 11, 2009, to confirm whether all investor related documents are available with them. It had also asked fund houses not to make any payment to distributors unless the documentation is complete.
However, SEBI said that it has not received any confirmation from trustees of fund houses and thus it draws conclusion that investors’ documents are not available with the AMCs. “It has been observed that due to such incomplete documentation investors’ rights to approach the AMCs directly are restricted and investors are forced to depend on the distributors for executing any financial or non-financial transactions,” the regulator said in the latest circular.
Some of the distributors are not comfortable sharing investor information with their respective asset management companies (AMC). The reasons for this could be that they fear that the AMCs would then directly approach the investor.
This regulation again brings to front the argument of who is the “owner” of the investor: the AMC or the distributor. There have been instances in the past where some distributors have been in conflict over issues such as sending newsletters and mailers.
It has, therefore, asked the AMCs to update investor related documents including account opening documents, PAN, KYC, power of attorney (if applicable), specimen signature by November 15, 2010. A confirmation on completion of the said process is to be submitted by November 22, 2010.
