Investor Protection: Another step forward by SEBI on MF schemes:

SEBI provides new Guidelines to the Trustees for constant supervision of  MF activities:

The Securities and Exchange Board of India (SEBI) on Monday issued guidelines to provide administrative assistance to mutual fund trustees for monitoring the various activities of mutual funds. SEBI has been time and again formulating new guidelines as to enhance  tight control on the MF business in order to protect the interests of the Investors.

So in line with their laid down motto of Investor protection and  enhanced transparency,the regulator in the circular said that mutual fund trustees should appoint a dedicated officer having professional qualification and minimum five years of experience in finance and financial services related field. The officer should be employee of the trustees and directly report to them. He/ she would  support and help the trustees in discharging their responsibilities.

This comes in wake of feedback from trustees that they needed such assistance.

Mutual fund regulations as prescribed by Sebi lays a lot on onus on the trustee board. Trustees have to ensure that Asset Management Companies (AMCs) have systems in place, the appointment of key managerial personnel and registrar, ensure that the fund houses do not act in manner which is beneficial to the associates of AMC and actions of AMC are not detrimental to interest of unit holders. Basically ensure that the AMC, its management and fund managers are avoiding conflict of interest.

To discharge their basic duties, the trustees, have to deal with voluminous data every quarter. They review all transactions carried out between the mutual funds, asset management company and its associates, they are also supposed to analyse redressal of investor complaints.

Analyzing this voluminous data requires that trustees understand the fund management on some level. To make their job a little easier the market regulator also allowed Trustees to have standing arrangement with firms for audit or legal advice.

“Further, Trustees shall have standing arrangements with independent firms for special purpose audit and/or to seek legal advice in case of any requirement as identified and whenever considered necessary,” Sebi said in a circular posted on its website. The new rule would come it of force from October 1,2020.

So MFs are under the strict control of the Regulator -SEBI- Therefore the Investors can now feel more confident in investing in MFs particularly SIP and get benefited.

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