- May 2014
- December 2013
Ruby Jacob, 27 Jun 2013
Mis-selling of mutual fund schemes by sales persons has been a big problem in the mutual fund industry. Thanks to mutual fund regulator SEBI's action, now it is mandatory for application form of mutual funds to carry EUIN which is a unique code for sales persons of mutual fund distributors registered with AMFI.
This step will not only give investors a way to get hold of the person who sold them a fund not suited to their profile but mutual fund agents themselves would be discouraged against random mis-selling of schemes to less-informed investors. EUIN rules have been into effect from June 1. Below are few useful details about EUIN for investors.
What is EUIN?
Employee Unique Identity Number (EUIN) has been prescribed by SEBI for all sales persons belonging to corporate distributors and individual distributors who are registered with AMFI.
AMFI is the industry body of mutual funds and every distributor or sub distributor of mutual funds must register with it and get the AMFI Registration Number (ARN). In September 2012 SEBI directed AMFI to create EUIN for all employees or sales person of distributors.
Database of Employee Unique Identity Number of all employees of corporate ARN holders is being maintained by CAMS.
How EUIN can help you
EUIN is unique to a sales person. It will be quoted on application form of any mutual fund scheme that you invest in through a distributor, online or offline. So if you realize the sales person had misled you to invest in a scheme not suited to your need or risk profile you can raise the matter up with AMFI.
EUIN is expected to solve the problem of accountability in mutual fund sales since distributors are required to immediately notify AMFI in case of a sales person joining or leaving them. Prior to this ARN number was captured on mutual fund application forms but there was no way of knowing the individual who sold the scheme. Even if it could be traced nothing could be done if the employee left the distributor to join another one.
A committee within AMFI will investigate your complaint against a mutual fund sales person and help CAMS decide on suspension or continuation of the concerned EUIN.
EUIN to be on mutual fund application forms
Based on AMFI's guidelines AMCs have modified their application forms to include EUIN along with ARN of their distributors. Application form of a scheme that you invest in through a distributor would have ARN, sub ARN and EUIN printed in separate columns. You should verify if this is present. Application forms of online distributors also would have these.
Not all mutual fund transaction forms are required to have EUIN. However in advisory transactions, where a distributor or his employee has advised you in selection of a particular scheme, it is compulsory to quote EUIN. If EUIN is not being quoted then ARN holder must check the box declaring "I/We hereby confirm that where the EUIN space has been left blank by me/us, the transaction is an execution-only transaction".
Particularly EUIN is applicable for purchase, switch, registration of SIP/STP/Trigger STP/Dividend Transfer Plan but EUIN is not applicable for installments under SIP/STP/SWP/STP Triggers, Redemption, SWP Registration, and installments under Dividend Transfer Plans.
Don't be a victim of mutual funds mis-selling
SEBI's new initiative is a welcome step for investor's protection but knowing the EUIN may not help in getting remedy or compensation for any loss you suffer as a victim of wrong mutual fund investment.
The best remedy against being sold bad financial products is to have adequate knowledge of fundamental aspects of the product you are buying. It is up to you to garner this knowledge but SEBI is also doing its bit in encouraging education by directing mutual fund AMCs to divert a small part of their revenue to investor awareness programs.
Besides, if you are not confident of your mutual funds selection skills due to lack of knowledge, you can consult a financial adviser and invest in the right scheme directly with the AMC skipping the distributor route altogether. Direct investments can enhance your returns too since they have lesser expense ratio, which is the charge deducted from returns for any mutual funds investment.