Fewer Complaints, Happier Investors? – Mutual Funds

The Association of Mutual Funds in India recently came out with a surprisingly low number of investor complaints. Has the mutual fund industry reached the epitome of a happy and satisfied investor base? Or is there more to the story?

Complaints Down, But Why?

In the first half of 2023, AMFI received just 485 complaints, much below that seen in previous years. While that may sound good, it can be touted as a positive development only if one looks at the reasons for such a steep fall.

Possible Explanations

Improved Service Quality: The mutual fund industry is engaged with optimum efforts in order to offer better service quality and transparency. This might be one reason behind receiving a lesser number of complaints.

Greater Investor Awareness: With greater awareness about mutual funds among investors, it is possible that they are more capable of managing small issues on their own.

Aversion to Complaints: Some investors may consider filing a complaint as cumbersome or even be apprehensive of the fallout.

Types of Complaints From Minor Glitches to Serious Concerns

Though the number of complaints is negligible, it is necessary to learn about the nature of these complaints:

• Routine Complaints: Normally relating to issues such as delayed statements, missing dividend payout, or commission discrepancies.
• Serious Complaints: These include serious complaints such as unethical selling practices, fund irregularities, or manipulation of application forms.

Addressing Investor Grievances:

AMFI has in place a system to address investor grievances:

• Routine Complaints: These are generally addressed to the respective fund houses or distributors for redressal.
• Serious Complaints: AMFI properly investigates into the matter, and if required, takes stern action like suspension and withdrawal of distributor licenses.

The Big Picture:

Though the numbers on complaints may be low, one needs to look at the larger picture:

Growing Investor Base: A few million new investors have been added to the mutual fund industry fold in the last couple of periods. Even if the percentage of complaints is meager, then too, in absolute terms, a large number of dissatisfied people would be there in that small percentage.

Continuous Improvement Needed: Investor education, ease of complaining, and sticking to ethical practices will be required to retain their trust in this industry.