5.4 Investor Grievance Redress Mechanism

Step One: The AMC

Every mutual fund must designate an investor relations officer whose name, address, telephone number and email are disclosed in the Scheme Information Document and on the AMC website. The investor must approach the AMC first. SEBI's platform is an escalation mechanism, not a first port of call, and a complaint lodged without approaching the entity is normally routed back to it.

The trustees oversee complaint handling. Complaint data — received, resolved, pending, and by category — is disclosed in scheme annual reports, which makes a pattern of unresolved grievances visible.

A distributor's role at this stage is practical: help the investor state the complaint precisely, with folio number, transaction date and the specific grievance, because vague complaints resolve slowly.

Step Two: SCORES

SCORES — the SEBI Complaints Redress System — is SEBI's web-based platform for securities market complaints. SCORES 2.0 was launched in April 2024 with automated routing, monitoring of timelines, and a structured two-level review.

How it works:

1. The investor lodges the complaint online against the AMC or intermediary.
2. It is auto-routed to the concerned entity and to a designated body — for mutual funds, an industry-level body that supervises redress.
3. The entity must submit an Action Taken Report (ATR) within 21 days of receipt.
4. If the investor is dissatisfied, a first-level review may be sought within 15 days of the ATR. The designated body examines the matter and files a further ATR.
5. If still dissatisfied, a second-level review may be sought within a further 15 days, at which point SEBI itself examines the complaint and responds.

SEBI publishes monthly data on complaints received and disposed through SCORES.

Step Three: Online Dispute Resolution

Where a matter is not resolved through SCORES, or where the investor prefers a dispute-resolution route, SEBI's Online Dispute Resolution (ODR) mechanism provides a common portal linking market participants to ODR institutions.

ODR proceeds in stages:

• Pre-conciliation and conciliation — a neutral conciliator attempts a settlement
• Arbitration — if conciliation fails, the dispute goes to online arbitration, producing a binding award

Once a matter is taken into ODR, the entity may file an ATR on SCORES stating that the subject matter has concluded in the ODR mechanism, and the SCORES complaint is treated as disposed. Conclusion in ODR at any stage — pre-conciliation, conciliation or arbitration — is sufficient for this purpose.

ODR is significant because it gives investors an adjudicatory route with a binding outcome, which SCORES does not provide: SCORES secures a response and regulatory attention, but does not award compensation.

Other Avenues

• SEBI toll-free helpline — 1800 266 7575 or 1800 22 7575, for guidance on process.
• Consumer forums and civil courts — remain available; investors are not obliged to exhaust the securities market route.
• SEBI Investor Protection and Education Fund — funds investor education and, in specified circumstances, certain investor claims.

What Complaints Actually Concern

In practice, mutual fund grievances cluster in a small number of categories:

• Non-receipt of redemption proceeds or income distribution
• Non-receipt or error in account statements
• Delay or error in a non-financial change — bank mandate, address, nomination
• Transmission difficulties on death of a unitholder
• Mis-selling — a scheme sold as guaranteed, a horizon mismatch, unexplained switching
• KYC status issues blocking transactions

The first four are operational and usually resolve at the AMC or RTA. The mis-selling category is where the distributor's own documentation becomes decisive: a dated risk profile and a written recommendation basis is the difference between a defensible file and an indefensible one.

The Distributor's Obligations

Under the AMFI Code of Conduct a distributor must assist investors in the redress process rather than obstruct it, must not discourage escalation, and must provide the records needed. A distributor who tells an investor that complaining will jeopardise their investment has committed a conduct breach independent of whatever the original grievance was.

What Makes a Complaint Actually Move

Most delay in grievance handling is caused by the complaint, not by the entity. A complaint that resolves quickly contains six things, and a distributor helping an investor prepare one should check for all of them:

1. Folio number and PAN, so the record can be located immediately
2. Scheme name, plan and option, stated exactly
3. Date and amount of the transaction complained about
4. What was expected and what happened, in one or two sentences
5. Supporting documents — account statement, transaction acknowledgement, bank statement showing a credit that did not arrive
6. What resolution is sought, stated explicitly

A complaint reading only that the money has not come is routed, queried, re-routed and eventually answered with a request for the folio number, and three weeks are lost.

What Each Forum Can and Cannot Deliver

Setting this expectation early prevents a second grievance about the grievance process. An investor who lodges a SCORES complaint believing it will award damages will be disappointed by an outcome that was never available there.

Complaint Data Is Public

Every scheme's annual report discloses complaints in a prescribed format — received, resolved, pending, and the ageing of unresolved items, broken down by complaint type. SEBI also publishes monthly SCORES data by entity. Both are worth a look before recommending an AMC to an investor, because a persistent cluster of unresolved service complaints is a fact about the fund house that no performance table will show.