Sinor new AMFI CEO, charts out road map

Former ICICI Bank and Indian Banks' Association CEO, HN Sinor was today appointed as Association of Mutual Funds of India's Chief Executive Officer with immediate effect. The current AMFI Chairman, AP Kurian announced that he will retire at the end of his term in September.

Speaking to CNBC-TV18 on what needs to be done, Sinor says AMFI has not moved towards a self-regulatory organisation (SRO). "The Securities and Exchange Board of India is regulating the industry as AMFI did not perform the self-regulatory organisation role." He added that AMFI's evolution towards a self-regulatory organisation would be a better choice.

Reviewing agent code of conduct and ethics is top of Sinor's agenda. He promises to put in place an ombudsman structure for investor grievance. "There is need for co-ordination between trustees, asset management companies and regulators. There is also need for fair trade practices, no mis-selling to small investors, and honesty, transparency towards small investors."

Here is a verbatim transcript of the exclusive interview with HN Sinor on CNBC-TV18. Also watch the accompanying videos.

Q: What more does AMFI need to do?
A: You see on the SRO (Self Regulatory Organisation) concept while I do accept that at some point of time we need to move in that particular direction, but it is a process of evolution. I don’t know to be very honest about many micro issues which are there.

But yes one basic issue as I look at it is that at the retail end when you have a large number of small investors, I think fair trade practices, being honest and transparent to small investors, not to try and missell to this segment of people and creating some kind of trust in this mutual fund industry by the small investor is very important.

Now whether it comes through regulation or self regulation. Maybe I would put it this way that SEBI is expecting industry to comply because perhaps AMFI has not moved towards self regulation. But it is too early for me to really react on this. But yes at some point of time evolution towards SRO would be a better choice.

Q: We have seen a situation where the regulator has set up a committee which has started interacting more with trustees and investors and somewhere one gets the impression that AMFI has been reduced to more like a club of asset management companies and has had probably very little interaction with trustees and investors. Do you think that is something that AMFI needs to change?
A: I do agree with you that we need to look at some kind of coordinated approach with trustees on one side, asset management companies and the regulators. So I don’t think that we can overlook any of the stakeholders in this industry.

Q: On the one hand we do have a code of ethics, we do have AMFI as a certifying agency for agents. But it is very sad that there has been practically very little enforcement of that. In fact I don’t even think half a dozen agents have been suspended for misselling in the entire history of AMFI till now. Is that going to be one of your priority areas to look at not just tightening perhaps the code of ethics but also enforcing it in a manner that actually benefits investors?
A: If I have to look at the top of the agenda, this is one area that I would like to do the first, which is to review the code of conduct, the code of ethics, fair practices for the small investors, having some kind of a structure of ombudsman within the system where grievances can be aired and rectified. I think this is what will be uppermost in my mind.

Source: http://www.moneycontrol.com/news/mf-news/sinor-new-amfi-ceo-charts-out-road-map_443590.html