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The Foundation of Independent Financial Advisor (FIFA) has requested SEBI to extend the timeline to resolve multiple issues related to KYC.
In a letter sent to SEBI, the federation has pointed out multiple inefficiencies in the current system that will make it impossible for the industry to fix KYC related issue by September 30, 2023.
FIFA said, “FIFA kindly requests SEBI's intervention to address these critical issues urgently. The efficiency and transparency of the Indian financial markets are pivotal to fostering investor confidence and growth in the mutual fund industry. We humbly request that sufficient time be given considering the above inefficiencies and reports / systems be developed to inform the Investors, MFD’s and other stakeholders information about the non-compliance.”
Among some key issues were withholding of trail commission even after completion of KYC, non-uniform process across RTA and so on. Here are some key highlights of the letter:
- RTAs have been withholding trail commission after even linking of PAN and Aadhaar
- Many NRIs witness difficulties in updating their NRI status on the income tax website. Request sent three months back are still pending. These investors should not be penalised due to administrative delays not in their control
- NRIs will have to furnish additional requirement of providing NRI status through income tax website. This process should be automated to reduce turnaround time and simplify existing process
- Linking of PAN and Aadhaar is not reflected on a real time basis
- MFDs and RIAs do not get access to comprehensive data for validating investors data
- Inconsistencies among KRAs to validate KYC. There is a need to standardize this process
- No support from most KRAs with respect to helpline numbers
- Delay in processing of new KYCs leads to numerous rejections in transaction
- There are mistakes in capturing data accurately by KRAs. Investors and MFDs should be allowed to verify and correct these details
- There is no clarity on KYC where clients do not have email id. This is hampering investments from senior citizen and low-income group clients
- Requirement of signature of all investors in joint accounts lead to signature mismatches and subsequent reduction of applications
