The financial services industry is supposedly well regulated. What with Rbi, Sebi, Irda, …the alphabet soup in place, does it help the retail investor. Sorry, is it supposed to help the retail investor?

These are the regulators, what happens with the so called ‘shareholders appointed auditor’?

Let us take the case of mutual funds. Most of the mutual funds are sold by agents and hence one of the important expenses for a fund house has to be the commission paid to the agent. If the auditor (statutory or internal) find out that one particular agent has been OVERPAID…the overpayment is immediately recovered from the next payment. No argument. Sheer show of strength. Of course if it is a big distributor who knows what is happening, he may fight, but the smaller distributor has no clue of what is happening.

What happens if a distributor has been paid SHORT? Is it immediately credited to his account? Heavens, No. It is credited to a suspense account WAITING for the distributor to ask. If he does not, it becomes a PROFIT for the AMC.

Exactly same with brokerage. If you have done a delivery transaction…but then change it to a trading transaction, chances are you will be charged delivery brokerage ….

HAS ANYBODY EVER GOT A CREDIT FROM A BROKERAGE HOUSE FOR EXCESS BROKERAGE CHARGED?

In Indian conditions, it does not happen…but read on…

http://www.huffingtonpost.com/2012/06/21/merrill-lynch-fined-for-o_n_1616867.html?ncid=edlinkusaolp00000003