Page 141 - DMGT512_FINANCIAL_INSTITUTIONS_AND_SERVICES

Financial Institutions and Services

Notes 3. The Association of Mutual Funds in India (AMFI) Certification is designed to be a
professional qualification that provides intermediaries with a thorough understanding of
mutual funds and how to present them appropriately to clients. The AMFI certification is
needed both for individuals and corporate distributors. The certification is required for all
individuals selling and representing mutual funds to clients, whether they are employees
of an intermediary organization or they are an individual financial planner/agent.

Code of Conduct for Intermediaries

1. Take necessary steps to ensure that the clients' interest is protected.
2. Adhere to SEBI Mutual Fund Regulations and guidelines related to selling, distribution
and advertising practices. Be fully conversant with the key provisions of the offer document
as well as the operational requirements of various schemes.

3. Provide full and latest information of schemes to investors in the form of offer documents,
performance reports, fact sheets, portfolio disclosures and brochures, and recommend
schemes appropriate for the client's situation and needs.
4. Highlight risk factors of each scheme, avoid misrepresentation and exaggeration, and
urge investors to go through offer documents/key information memorandum before
deciding to make investments.
5. Disclose all material information related to the schemes/plans while canvassing for
business.
6. Abstain from indicating or assuring returns in any type of scheme, unless the offer document
is explicit in this regard.

7. Maintain necessary infrastructure to support the AMCs in maintaining high service
standards to investors, and ensure that critical operations such as forwarding forms and
cheques to AMCs/registrars and dispatch of statement of account and redemption cheques
to investors are done within the time frame prescribed in the offer document and SEBI
Mutual Fund Regulations.
8. Avoid colluding with clients in faulty business practices such as bouncing cheques, wrong
claiming of dividend/redemption cheques, etc.

9. Avoid commission driven malpractices such as:
(a) Recommending inappropriate products solely because the intermediary is getting
higher commissions there from.

(b) Encouraging over transacting and churning of mutual fund investments to earn
higher commissions, even if they mean higher transaction costs and tax for investors.
10. Avoid making negative statements about any AMC or scheme and ensure that comparisons
if any, are made with similar and comparable products. 3.11 Ensure that all investor
related statutory communications (such as changes in fundamental attributes, exit/entry
load, exit options, and other material aspects) are sent to investors reliably and on time.
11. Maintain confidentiality of all investor deals and transactions.
12. When marketing various schemes, remember that a client's interest and suitability to
their financial needs is paramount, and that extra commission or incentive earned should
never form the basis for recommending a scheme to the client.

13. Intermediaries will not rebate commission back to investors and avoid attracting clients
through temptation of rebate/gifts etc.

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