For those who are seeing just this part, please see part 1 (the problem), part 2 (the solution and the explanation given by X -the Amc) and then come here (the client’s epic response). A is the name of the Investor, and X is the name of the Asset Management Company. Read on…

X’s response to my disputing the pledge transaction raises more questions than it answers. I can see glaring gaps in X’s in-house business processes and systems. Again the objective of this post is purely educational. A constructive critique from an aggrieved investor, who also happens to be a veteran with years of experience in optimising and transforming business processes and systems for Fortune 100 companies.

Let me address X’s response point by point.

1. X’s response says… “In order to safeguard the interest of our investors from any fraudulent encashments, we follow various checks and balances from time to time”

My response. “Appreciate the proactive risk mitigation plans. Please continue to sharpen your failure modes analysis proactively.”

2. X’s response says…“Your case was specific to the process we follow in case of folios which have multiple investors with different PAN numbers but the same default bank account. As part of this process, we initiate a “penny drop” to verify such bank accounts.”

My response… “Yes. I held the units jointly in either or survivor mode with my spouse and mother. In the interest of simplifying the number of bank a/cs, I use only one back a/c for investment purposes. And that a/c too is jointly held, which is how everyone is advised to maintain. This has been my family practice for decades now. Not just with X, but with all our other investments ”

3. X’s response says… “ In case the bank account verification indicates an error, we flag this account for verification before any further transaction. In your case, there was a name mismatch error indicated by the process between our records and those of the bank. Hence, a temporary escrow was created as a safeguard to verify your bank account prior to any transaction.”

My response… “ This simply baffles me. First off, I’ve been maintaining these folios for years, and have done enough transactions which passed through without a glitch. As recently as last December online transactions went through. How did the name mismatch suddenly arise?

Secondly, My folios are Aadhaar linked and verified, and the same is the case with my bank a/c. How can there be a name mis-match between Aadhaar verified a/cs? Is that even possible?

Assume for a moment, in Aadhar verified a/c’s these name mismatches are possible. Why would X block (or) pledge all my units? How’s pledging someone’s units without their knowledge an investor safety/friendly measure? Why an email or text alert was not sent warning me of such a development? Even my relationship manager (RM) didn’t know that I can’t transact for the aforesaid reason! Isn’t that intriguing? The RM who’s otherwise so warm and responsive …was at sea for those 2-3 days running pillar to post escalating to back end teams! X had accorded me the privilege of an extremely professional RM. Had the RM knew of such an ‘investor safety measure due to a penny drop test’, she would have personally called to verify with me! That clearly didn’t happen.

4. X’s response says… “ The same was successfully verified and your transaction was allowed post this verification.”

My response. This baffles me even more. What changed? Same unit holders in the same order, and same mode of holding, and  with that same bank a/c. To the best of our knowledge our names are also the same! How come magically everything fell in place?

These are tell tale signs of thoroughly broken processes and system silos which impedes  seamless customer journeys and experience. I can point to a few glaring gaps, as I see:

• The front office (RM) has no clue of what the back office has either done or doing. You have invested in a full time resource to service clients. What’s the point of this, if the RM concerned doesn’t even know what has happened to the client’s assets they are supposed to service?
• The KYC and client on-boarding team and their system is a silo. They do the Aadhaar link and verification and safely keep these records. My experience proves that this team doesn’t talk to the risk management teams who would do these ‘penny drop checks’. Had they talked to each other and found out that this is an Aadhaar verified a/c this should not have happened.
• What’s the point of ‘pledging’ client’s units in the name of safeguarding his interest? I’m hearing of such a client safety measure probably for the first time.

To sum it up, this response is disappointing, to put it mildly. Trust is earned over years, if not decades. X has reinforced the basic lesson to trust, but verify! And when I verified, X failed!