1. Take necessary steps to ensure that the clients’ interests are protected.
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2. Adhere to SEBI Mutual Fund Regulations and guidelines issued from time to time
related to selling, distribution and advertising practices. Be fully conversant
with the key provisions of the Scheme Information Document (SID), Statement of Additional
Information (SAI), Key Information Memorandum (KIM) as well as the operational requirements
of various schemes.
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3. Provide full and latest information of schemes to investors in the form of SID,
performance reports, fact sheets, portfolio disclosures and brochures, and recommend
schemes appropriate for the client’s situation and needs.
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4. Highlight risk factors of each scheme, avoid misrepresentation and exaggeration
and urge investors to go through SID/KIM before deciding to make investments.
5. Disclose to the investors all material information including all the commissions
(in the form of trail or any other mode) received for the different competing schemes
of various Mutual Funds from amongst which the scheme is being recommended to the
investors.
6. Abstain from indicating or assuring returns in any type of scheme, unless the
SID is explicit in this regard.
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7. Maintain necessary infrastructure to support the AMCs in maintaining high service
standards to investors, and ensure that critical operations such as forwarding forms
and cheques to AMCs/registrars, and despatch of statement of account and redemption
cheques to investors are done within the time frame prescribed in the SID/SAI and
SEBI Mutual Fund Regulations. Note: SID should be read in conjunction with SAI and
not in isolation.
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8. Avoid colluding with clients in faulty business practices such as bouncing cheques,
wrong claiming of dividend/redemption cheques, etc.
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9. Avoid commission driven malpractices such as :
a) Recommending inappropriate products solely because the intermediary
is getting higher commissions therefrom.
b) Encouraging over-transacting and churning of Mutual Fund investments
to earn higher commissions, even if they mean higher transaction costs tax for investors.
10. Avoid making negative statements about any AMC or scheme and ensure that comparisons,
if any, are made with similar and comparable products.
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11. Ensure that all investor-related statutory communications (such as changes in
fundamental attributes, loads, exit options and other material aspects) are sent
to investors reliably and on time.
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12. Maintain confidentiality of all investor deals and transactions.
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13. When marketing various schemes, remember that a client’s interest and suitability
to their financial needs is paramount and that extra commission or incentive earned
should never form the basis for recommending a scheme to the client.
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14. Intermediaries will not rebate commission back to investors and avoid attracting
clients through temptation of rebate/gifts etc.
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15. A focus on financial planning and advisory services ensures correct selling
and also reduces the trend towards investors asking for passback of commission.
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16. All employees engaged in sales and marketing should obtain AMFI certification.
Employees in other functional areas should also be encouraged to obtain the same
certification.
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