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Employee Unique Identification Number required for all Mutual Fund Transactions

mutual fund agent

Employee Unique Identification Number required for all Mutual Fund Transactions

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In order to address the problem of mis-selling of Mutual Fund products, SEBI (Regulatory body) has made it mandatory to mention the unique identification number (EUIN) of the employee / relationship manager / sales person of the distributor interacting with the investor, in addition to the AMFI Registration Number (ARN) of the distributor.

What is Employee Unique Identification Number (EUIN) :

EUIN is a unique number that will capture the identification of the sales person / employee / relationship manager interacting with the investor, irrespective of whether the transaction is “Execution only” or “Advisory”. It is allotted to each Sales Person holding a valid NISM certificate and associated with an ARN holder who wish to interact with the investor for the sale of mutual fund products. However, a mere quoting of EUIN will not give an “advisory” character to the transaction.

ARN holders are requested to intimate AMFI, in case they employ any ‘Sales Person’ so that EUIN could be allotted to them.

Purpose :

It has been observed that there is a lot of mis-selling happening in the mutual fund sector. And at times it becomes difficult to track the person responsible for such mis-selling. EUIN will assist in tackling the problem of mis-selling even if the employee / relationship manager / sales person leaves the employment of the distributor or his / her sub broker.

Is it Mandatory to provide EUIN in transaction ?

Quoting of EUIN is mandatory irrespective of whether the transaction is “Execution only” or “Advisory”. The ARN Holder should put his / her EUIN in the column provided in the application form. Investors are therefore advised to check & mention the AMFI allotted ‘Employee Unique Identification Number (EUIN)’ of the distributor’s sales personnel who has advised / executed the investment/switch.

However, in case of certain exceptional instances where the investment / switch has been carried out or submitted without any interaction by the employee / sales person / relationship manager of the distributor / sub broker with respect to the transaction, Investors are requested to submit the following declaration separately:

“I / We hereby confirm that the EUIN box has been intentionally left blank by me/us as this transaction is executed without any interaction or advice by the employee / relationship manager / sales person of the above distributor / sub broker or notwithstanding the advice of in-appropriateness, if any, provided by the employee / relationship manager / sales person of the distributor / sub broker.”

Separate declaration must be furnished for each separate transaction / application. Investors are advised to use new application forms which have the provision for ARN code, Sub broker ARN code, EUIN, Sub broker code (code allotted by the ARN holder).

Applicable Transactions :

  • EUIN Applicable : Purchases, Switches, Registration of Systematic Investment Plan (SIP) and Registration of Systematic Transfer Plan (STP) including transactions routed through stock exchanges
  • EUIN Not Applicable : Registration of Systematic Withdrawal Plan, Ongoing instalments under SIP / STP / SWP, Dividend Reinvestments, allotment of Bonus Units and Redemption, transactions routed through overseas distributors.

As an Investor what you must ensure ?

  • If routed through a distributor, please use new forms that have space for EUIN and Sub broker code and must ensure that the application form shall have a valid EUIN besides a valid ARN code and, Sub broker ARN code.
  • Investors transacting online or through any other mode offered by a distributor, do mention the EUIN and sub-broker ARN code while placing the transaction. In case of transaction where there is no interaction with any representative / agent of a distributor, investors are requested to clearly indicate the same by submitting the above declaration format.

Challenges :

Challenge will come to ensure that all salespersons are EUIN compliant. Moreover mis-selling is so rampant at all levels and mere getting EUIN may not prevent employees to indulge in mis-selling. There is still no clarity on what constitutes mis-selling. Though the new system of labelling the mutual funds is already there, yet its not fool-proof. Further, mutual fund advisors rarely undertake proper risk profiling of the clients, or ascertain their needs and goals.

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