Investor complaints against top fund houses drop by 46 percent in 2014

Standardization of processes, enhanced quality checks and reduction in transaction volumes have resulted in less number of complaints against fund houses.

Fund houses seem to have worked hard on improving customer service.

An analysis of investor complaints received by top ten fund houses shows that the complaints have dropped by as much as 46% in 2014. The top ten fund houses received 57,321 complaints in FY 2012-13 which fell to 31,006 in FY 2013-14.  

Reliance saw the largest fall in its complaints. Its complaints fell from 13,679 (the highest in the industry) in FY2012-13 to 3,453, down 75% in FY 2013-14. The second largest drop in investor complaints was recorded by ICICI Prudential which saw its complaints dropping from 13,000 to 4,353, a fall of 67%, during the same period.

Fund officials said that the industry has standardized its processes because of which the complaints have dropped substantially. “We have standardized our processes. Also, we worked closely with registrars to reduce the errors,” said the operations head of a bank sponsored fund house.

Among the top ten fund houses, Kotak had the least number of complaints (408), followed by DSP BlackRock (760).

“We do lot of quality checks to minimize errors. If we don’t understand the handwriting of investors we call them up to get it rectified. The account statements have to be sent on T+2 basis so fund houses get less time to rectify errors. We have observed that investors fill the first page correctly and by the time they are on second page their handwriting changes. Also, SIP volumes have dropped for the industry this year which has contributed to lesser complaints,” said an official from DSP BlackRock Mutual Fund.

Except UTI and IDFC, all top fund houses saw a drop in complaints received from investors.

A large number of complaints received by AMCs were pertaining to data corrections in investor details, and non-updation of changes viz. address, PAN, bank details, nomination, etc. in case of some fund houses.

Fund officials said that reduction in transaction volumes is another reason for the sharp fall in investor complaints.

“We have enhanced our quality checks internally and with the registrar. The volumes of transactions have also come down which is why the complaints have dropped,” said D P Singh, Executive Director, CMO (Domestic Markets), SBI Mutual Fund.

Large number of complaints are received due to the illegible data provided by investors. Out of the 31,000 complaints received from investors, 52% or 16257 complaints were related to data correction. Experts said that these complaints are largely due to errors made by investors while filling up application forms. They believe that a vast majority of such manual errors are likely to be minimized with the launch of MF Utility, since data will be keyed in through computers.