The Code of Conduct, Checking an ARN and Where to Complain
AMFI's code of conduct sets out how a distributor must behave, so it tells an investor what to expect. This lesson covers what the code forbids and requires, how to check an ARN, and where a complaint goes.
What a distributor may not do
Four prohibitions matter most to an investor. A distributor may not promise or indicate returns. It may not rebate commission, that is, pass part of it back to the investor. It may not induce an investor to switch from scheme to scheme so as to earn more, which is known as churning. And it may not pool investors' money or units in its own account.
Each of these removes a way in which a seller's interest could work against the investor's: an assured-sounding return, an inducement to buy, needless transactions, or control over the investor's money.
What a distributor is expected to do
A distributor must use marketing material provided by the fund house, or approved by it, and needs written approval to show a fund house's name or logo. A risk warning or the use of CAGR does not make a distributor's own unapproved material acceptable.
The code also says a distributor should seek information about the investor's financial status, investment experience and investment objectives, so that what is sold is appropriate for that investor. Breaches of the code can lead to suspension or cancellation of the ARN.
Checking an ARN and making a complaint
AMFI registers distributors and issues each an ARN, and an investor can verify an ARN on AMFI's website. Scheme documents and the riskometer describe a scheme; they say nothing about whether the person selling it is registered.
A complaint goes first to the fund house and its investor service centre. If it is not resolved, the next step is SEBI's SCORES portal, where the entity must reply within 21 calendar days, and after that online dispute resolution. There is no ombudsman for mutual funds.
None of this protects against market risk. The code governs conduct; it does not make a scheme's value any more certain.
Rules at a glance
Three things a seller does (illustrative)
A person offering mutual funds tells Sunita that a scheme is sure to earn a stated return every year, offers to hand back part of his commission if she invests, and gives her a leaflet he designed himself carrying a fund house's logo.
Each is a breach of AMFI's code: a promise of returns, a rebate, and unapproved marketing material using a fund house's logo. Sunita can look up his ARN on AMFI's website. If she has a complaint, it goes to the fund house first, then to SCORES, and then to online dispute resolution.
Key points
- A distributor may not promise or indicate returns, rebate commission, induce churning, or pool investors' money or units.
- Only marketing material supplied or approved by the fund house may be used.
- A distributor should seek information about the investor's financial status, experience and objectives.
- An investor can verify an ARN on AMFI's website; breaches of the code can lead to suspension or cancellation of the ARN.
- Complaints go to the fund house first, then SCORES (21 calendar days), then online dispute resolution; there is no mutual fund ombudsman.
Common misunderstandings
- A distributor is not allowed to indicate a likely return: the code bars promising or indicating returns at all.
- A risk warning does not make a distributor's own leaflet acceptable: only material supplied or approved by the fund house may be used.
- A mutual fund complaint does not go to an ombudsman: there is none; the route is the fund house, SCORES and online dispute resolution.
Questions people ask
What is churning?
Inducing an investor to switch between schemes so that the distributor earns more. AMFI's code forbids it.
How long does an entity have to reply to a complaint on SCORES?
21 calendar days.
Does the code of conduct protect an investor from losses?
No. It governs how a distributor behaves. The market risk of a scheme stays with the investor.
What this lesson relies on
- AMFI code of conduct for mutual fund distributors
- SEBI's SCORES 2.0 framework (effective 1 April 2024)
- SEBI Master Circular for Mutual Funds, 20 March 2026 (investor grievance redress; online dispute resolution)
This lesson was reviewed independently against these sources on 8 October 2026. Rules change: check the current regulation, scheme document or policy wording before relying on any figure. This is education, not advice.