Mutual fund trade body, Association of Mutual funds in India (Amfi) plans to decide on best practices guidelines on distributor commission.
Last week, Amfi met all the distributors to discuss the issues of commission structure and fine some solution. In a meeting, to be schedulded in the next few days, they will also likely look at merger and consolidtaion of similar open ended schemes and enhancing scheme related disclosures.
According to the senior officials from the industry which are members of various committees of Amfi said, “A few distributors had a meeting with the Amfi last week and we hope that some final conclusion with fund houses can be taken on the commission issue.” Since the start of April 1, 2015 Amfi had asked fund houses to cap upfront commissions at 1%, but few players continued giving high commission to distributors as many distributors had earlier expressed their displeasure on capping upfront commission.
Amfi had asked market regulator Securities and Exchange Board of India (Sebi) to intervene in the commission issue. In the past, Sebi chairman UK Sinha had criticised the mutual fund industry for not demonstrating self-discipline on upfront commissions.
Officials also added that, apart from commission issue, Amfi is also likely to discuss various matters like provision for disclosures of executive compensation, centralised usage of money set aside for investors awareness and improvement in complaint resolution.
“It is known that the regulator is unhappy with the numbers of schemes in the industry. Now its upto the industry to consolidate or merge similar open ended scheme. If we fail to do so, regulator might withold sanctions for new schemes until the process is completed,” said a member of Amfi.
Even the Sumit Bose Committee report on measures for curbing mis-selling and rationalisation in financial products would be discussed in the meeting along with enhancing schemes related disclosures.