Financial Daily from THE HINDU group of publications
Thursday, Oct 03, 2002

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Opinion - Letters

MF investors' rights

Mutual fund distributors are unjustified in their concerted move to abridge the rights of investors. Their stand that investors cannot switch mid-way and that those wanting to change to another distributor should first liquidate the earlier investment and obtain a no-objection certificate from him is astounding and untenable. Nor is AMFI right in stipulating that those wishing to change distributors should state that they are not satisfied with their services.

There is no such duty, either legal or moral, cast on the investor. Each transaction is a separate one. MF distributors are attempting to make their customers into bonded ones.

The argument against sharing the incentive with the investor is also out of place in a free market environment. In fact, regulators of financial services should insist on the service provider informing the incentive he pays to the intermediary when a customer buys its product.

SEBI would do well to scotch the efforts of the MFs and their distributors to abridge the rights of the investors, for their current campaign amounts to using the regulating machinery to give unmerited protection to their income at the cost of investors' rights.

S. Subramanyan


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