Investor Grievance Redressal System - SCORES

SEBI has issued a circular dated 26th March, 2018 on the new measures initiated under SCORES, the investor grievance redressal system under SEBI. The gist of the circular is given below:

1. This circular is being issued in continuation to SEBI circular no. CIR/OIAE/1/2014 dated 18th December, 2014 regarding redressal of investor grievances through SEBI Complaints Redress System (SCORES) platform.

2. SCORES is a web based centralized system to capture investor complaints against listed companies and registered intermediaries and is available 24x7. It was introduced on June 8, 2011 and has been facilitating redressal of investor grievances in a speedy manner.

3. SEBI encourages investors to lodge complaints through electronic mode in SCORES. However, complaints received from investors in physical form are also digitized by SEBI and uploaded in SCORES. Thereafter, follow-up actions of the complaint are done in electronic form only i.e. through SCORES. Investors can easily access, retrieve and preserve the complaints lodged by them in electronic mode. Further, it enhances the turnaround time and speed of redressal of a complaint.

4. Investors may contact the Investor Associations (IAs) recognized by SEBI for any assistance in filing complaints on SCORES. The lists of Investor Associations are available on SEBI website (www.sebi.gov.in). Investors may also seek assistance in filing complaints on SCORES from SEBIs toll free helpline number 1800 266 7575 or 1800 22 7575.

5. SEBI has received inputs from listed companies and intermediaries that investor grievances can be resolved faster if the grievance been taken up directly with the entity at the first instance. Accordingly, it appears to be prudent and time saving if the investors approach the concerned listed company or registered intermediary first with all the requisite details to redress the complaints. In case, the listed company or registered intermediary fails to redress the complaint to the investor’s satisfaction, the investor may file a complaint in SCORES.

6. At present following types of complaints are not dealt through SCORES:

i. Complaints against the companies which are unlisted/delisted, in dissemination board of Stock Exchanges,

ii. Complaints those are sub-judice i.e. relating to cases which are under consideration by court of law, quasi-judicial proceedings etc.

iii. Complaints falling under the purview of other regulatory bodies viz. RBI, IRDAI, PFRDA, CCI, etc., or under the purview of other ministries viz., MCA, etc.

iv. Complaints against a sick company or a company where a moratorium order is passed in winding up / insolvency proceedings.

v. Complaints against the companies where the name of company is struck off from RoC or a vanishing company as per list published by MCA.

vi. Suspended companies, companies under liquidation / BIFR / etc.

7. To enhance investor satisfaction on complaint redressal, SEBI has already put in place a ‘Complaint Review facility’ under SCORES wherein an investor if unsatisfied with the redressal may within 15 days from the date of closure of his complaint in SCORES opt for review of the complaint and the complaint shall be escalated

8. Effective from August 01, 2018, following procedure shall be followed for filing and redressal of investor grievances using SCORES:

a. Investors who wish to lodge a complaint on SCORES are requested to register themselves on www.scores.gov.in by clicking on “Register here”. While filing the registration form, details like Name of the investor, PAN, Contact details, Email id, Aadhaar card number(optional), CKYC ID(optional) etc. (Annexure A) may be provided for effective communication and speedy redressal of the grievances. Upon successful registration, a unique user id and a password shall be communicated to the investor through an acknowledgement email / SMS.

b. An investor shall use login credentials for lodging complaint on SCORES (“Login for registered user” section). Details on how to lodge a complaint on SCORES is at Annexure B.

c. The complainant may use SCORES to submit the grievance directly to companies / intermediaries and the complaint shall be forwarded to the entity for resolution. The entity is required to redress the grievance within 30 days, failing which the complaint shall be registered in SCORES

d. Presently, the limitation period for filing an arbitration reference with stock exchanges is three year. In line with the same and in order to enhance ease, speed & accuracy in redressal of investor grievance, the investor may lodge a complaint on SCORES within three years from the date of cause of complaint, where; 

Investor has approached the listed company or registered intermediary for redressal of the complaint and, The concerned listed company or registered intermediary rejected the complaint or,

The complainant does not receive any communication from the listed company or intermediary concerned or,

The complainant is not satisfied with the reply given to him or redressal action taken by the listed company or an intermediary.

SEBI order on listed company for non redressal of investor complaints

This is an interesting case passed by SEBI and put up at their website here regarding an order passed against a listed company viz. Vakrangee Softwares Limited. This company had some 10 investor complaints pending against it in the SCORES system when the show cause notice was issued to it. Subsequently one after another the company started redressing one complaint after another. By the time there was a hearing on 22nd January, 2014 there were only five complaints pending against it, though the company has said that there were no complaints pending. After going through the records SEBI came to the conclusion that all the complaints were resolved albeit with a delay.

SEBI relied on section 15-C of the SEBI Act which stated as under:

Penalty for failure to redress investors’ grievances. 
15C. If any listed company or any person who is registered as an intermediary, after having been called upon by the Board in writing, to redress the grievances of investors, fails to redress such grievances within the time specified by the Board, such company or intermediary shall be liable to a penalty of one lakh rupees for each day during which such failure continues or one crore rupees, whichever is less.

Further section 15J gives guidelines on the quantum of penalty.

“15J - Factors to be taken into account by the adjudicating officer 
While adjudging quantum of penalty under section 15-I, the adjudicating officer shall have due regard to the following factors, namely:-
a. the amount of disproportionate gain or unfair advantage, wherever quantifiable, made as a result of the default;
b. the amount of loss caused to an investor or group of investors as a result of the default;
c. the repetitive nature of the default.”

SEBI came to the conclusion that it was unable to quantify the amount of disproportionate gain or unfair advantage or loss to investors and therefore levied a token penalty of Rs.2 lakhs on the company.

I don't know whether the company is going in for appeal against this decision of SEBI.

But for listed company and its intermediaries i.e. the Registrars and Share Transfer Agents this is a wake up call that they should not treat investor complaints lightly. I hope similar penalties are levied against the Mutual Funds who are notorious in their customer service.