Mutual fund investments have simplified greatly with just a tap on your smartphone. But what if, due to some glitch on the app, you lose your investment or have any other issue with your mutual fund investments? Where do you complain, and how do you get it resolved? Get answers to all these questions and more in this blog to have better control over your mutual fund investments.
Mutual funds have practically become a staple investment option for every portfolio. However, investors could have several issues with their mutual fund portfolio that need to be addressed. Here are a few reasons why investors may need to complain about their mutual fund portfolio.
Every mutual fund scheme comes with certain fees, like the expense ratio or exit load. However, sometimes, investors may notice charges that were not clearly explained or were higher than expected. If any deductions are made from an investor’s account without proper transparency or advance notice, the investor has the right to seek an explanation. If the charges appear to be unfair or hidden, it becomes a valid reason for the investor to file a complaint against the mutual fund provider.
There are times when mutual fund companies or their agents make unrealistic promises to investors, such as guaranteed high returns or risk-free investments. These kinds of statements can be very misleading because mutual funds are always subject to market risks, and the returns are never assured. If an investor was convinced to invest based on such false claims, it is considered mis-selling.
Investors may face issues during the transaction process, such as the amount being deducted from their bank account, but the mutual fund units not being credited to their account. In some cases, an incorrect Net Asset Value (NAV) may be applied, or there might be a delay in processing a purchase or redemption request. These kinds of operational errors can result in financial loss or confusion for the investor. If the mutual fund company does not address or resolve such errors in a timely manner, the investor can formally file a complaint.
Customer support is one of the strongest assets for a mutual fund house. Therefore, when an investor fails to get optimum customer service on their aggrieved issues, they can file a complaint and seek resolution. Long delays, rude behaviour, or unhelpful responses are part of service-related grievances.
It is the responsibility of the mutual fund company to send regular updates to investors. This includes account statements, transaction confirmations, and annual reports. If an investor does not receive these documents on time, or if there are mistakes or missing details in them, it causes a lack of transparency. If the investment portfolio is not properly reflected or records are inaccurate, the investor can report the issue to ensure their information is correctly maintained.
When an investor chooses to withdraw their money from a mutual fund (also known as redemption), the amount should be credited to their bank account within a fixed period, usually within three working days. If this timeline is not followed, or if the amount is not credited at all, it may cause financial stress to the investor. Such delays or failures in payment are serious matters and should be reported to the concerned mutual fund company or the regulator.
If an investor finds any transaction in their mutual fund account that they did not carry out or approve, it could be a case of fraud or unauthorised access. This is a serious issue that may involve someone misusing the investor’s account. In such cases, the investor should immediately report the suspicious activity to the mutual fund company and also alert the regulatory authorities to prevent further damage.
Before investing in mutual funds, every investor must complete the Know Your Customer (KYC) process. Sometimes, KYC requests may be wrongly rejected due to small document errors or system-related issues. Also, when investors try to update personal details like name, address, or bank account, the changes may not be processed correctly. If such problems stop the investor from making transactions or accessing their funds, it becomes a valid reason to file a complaint.
SEBI and AMFI have created various stages and portals for investors to address their complaints. This enables investors to file their issues and escalate them at different levels. Here is a brief explanation of the same.
When an investor faces any problem related to their mutual fund investment, the first step is to directly contact the mutual fund company (also called the Asset Management Company or AMC. All mutual fund companies in India need to have a systematic grievance redressal system in place to handle complaints. The investor can call the company’s customer service helpline, send an email to their official complaint email ID, or even visit the company’s office to submit a written complaint. It is important to include all relevant information at this stage, like the folio number, transaction details, and a clear explanation of the issue. As per SEBI rules, mutual fund companies must acknowledge your complaint within 7 working days and try to resolve it within 30 days. In most cases, mutual fund companies resolve the problem at this stage without the need to go any further.
After addressing the complaint to the AMC, if investors do not get a sufficient resolution or within a reasonable time, they can escalate the issue to the Investor Services Cell of the stock exchange where the mutual fund is listed. For example, the National Stock Exchange (NSE) has a dedicated cell to help investors with complaints. Investors can submit their complaints online through the stock exchange’s website or by visiting the nearest service centre. This step gives the investor a chance to get the issue addressed by a neutral party connected to the securities market.
If the problem still remains unsolved, the investor can escalate the issue to the next stage of redressal, i.e., file a complaint with SEBI (Securities and Exchange Board of India). SEBI is the main regulator for mutual funds in India and has an online system called SCORES (SEBI Complaints Redress System). Investors need to register on the SCORES website and then submit the complaint along with any supporting documents, such as email proof, statements, or screenshots. SEBI will then ensure that the mutual fund company takes action to resolve the issue. The status of the complaint can be tracked online, making the process transparent and easy to follow.
In cases where the complaint involves serious disputes, such as disagreement over transactions, charges, or service failure, the investor can use the Online Dispute Resolution (ODR) platform introduced by SEBI. This portal allows investors and mutual fund companies to resolve their disputes through online arbitration or conciliation. It is a faster and more convenient way of handling serious issues without going to court, and it is specifically designed for the securities market.
In cases where none of the earlier methods bring a satisfactory result, the investor can consider taking legal action. This can be done by filing a case in a consumer court or other appropriate judicial forums. This step is usually taken only when the issue is very serious, such as cases of fraud, large financial loss, or repeated negligence by the mutual fund company. Legal proceedings may take more time and might need professional legal advice or the help of a lawyer.
As mentioned above, SCORES is the SEBI portal where investors can register their complaints against mutual funds. The steps to file any complaint are explained below.
The investor should first visit the official SEBI SCORES website at https://scores.sebi.gov.in/.
If the investor is using the portal for the first time, they must register by clicking on ‘Register Here’.
During registration, the investor needs to provide personal details such as their full name, PAN number, mobile number, email ID, and residential address.
The investor must also create a password to complete the registration process and will receive a confirmation by email or SMS.
After successful registration, the investor can log in to their SCORES account using their email ID and password.
To file a complaint, the investor should click on “Complaint Registration” and select “Mutual Funds” as the complaint category.
The investor must then choose the name of the mutual fund company against which the complaint is being made.
The complaint form should be filled out carefully, including the type of issue, the date when the issue occurred, and a brief and clear description of the problem.
The investor should upload any supporting documents, such as mutual fund statements, email communication, or screenshots, to support their complaint.
Once all information is filled in, the investor should review the form and then click on “Submit”.
After submitting, the investor will receive a Complaint Reference Number, which should be saved for future tracking.
The investor can log in to their SCORES account at any time to check the status of their complaint.
SEBI will forward the complaint to the concerned mutual fund company, which is expected to respond within 30 days.
If the mutual fund company fails to respond or the response is not satisfactory, the investor has the option to escalate or re-open the complaint on the SCORES portal.
Once the complaint is duly filed, investors can track the status of their complaint through the SCORES portal. The steps for the same are,
Investors should go to the SCORES website at https://scores.sebi.gov.in/.
They must log in using their registered email ID and password.
After logging in, investors should click on the “View Complaint Status” option on the dashboard.
Investors can enter the Complaint Reference Number to see the current status.
The system will show updates like whether the complaint has been forwarded, responded to, or closed.
If the complaint is unresolved or the response is not satisfactory, investors can choose to escalate it through the same portal.
Mutual fund investments are among the easiest and fastest ways to create wealth, and hence, millions of investors in India favour them. Thus, with the interests of millions of investors at stake, SEBI has provided a detailed structure for grievance redressal that can help them file their complaints and seek resolution for the same.
This article talks about a very important aspect of mutual funds and safeguarding investors’ interests. Let us know your thoughts on this topic or if you need further information on the same, and we will address it.
Till then, Happy Reading!
Read More: Common Mistakes to Avoid while Investing in Mutual Funds
Marisha Bhatt is a financial content writer @TrueData.
She writes with the sole aim of simplifying complex financial concepts and jargon while attempting to clarify technical and fundamental analysis concepts of the stock markets. The ultimate goal is to spread vital knowledge and benefit the maximum audience. Her Chartered Accountant background acts as the knowledge base to help clarify crucial concepts and create a sound investment portfolio.
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