Mutual Funds To Be Responsible For Distributor Mis-selling, Says SEBI Chairperson

There should be no misconceptions that mutual fund distributors are not regulated entities, said Securities and Exchange Board of India Chairperson Madhabi Puri-Buch at an event organised by SBI Mutual Fund on Friday.

In the event that there are any infractions, including mis-selling by a mutual fund distributor, the asset management company they are affiliated with will ultimately be held responsible, according to Buch.

To that end, the regulator has hauled up asset management companies in such instances in the past.

Asked whether banks preferring to sell products of mutual funds associated with their groups was a matter of concern, Buch said she does not perceive this as an issue. For example, the State Bank of India choosing to distribute SBI Mutual Fund schemes, she said, was a case of the bank leveraging its network strength.

"Different organisations have different strengths. Somebody may have a very strong brand. If SBI has the might of their distribution, why should they not use it?" Buch said.

The SEBI chairperson was responding to questions by reporters at the SBI Mutual Fund event and spoke about an array of subjects, including the need for regulations to govern speculation in derivatives, finfluencers and the need for market intermediaries to work together to safeguard their systems and processes.

Buch also spoke about instances of financial influencers seeking registered investment advisor licenses.

"Our team is on the job. I think you should see a consultation paper on this reasonably quickly, which will address the regulatory arbitrage", she added.