Skip to main content

Mutual Fund agents' upfront fee commission to be capped at 1% FROM 1ST JAN2016


Mumbai :A day after Sebi chairman U K Sinha sent a strong message to the mutual fund (MF) industry to reduce upfront commission, most members of AMFI, the fund industry trade body, agreed to cap it at 1% of the total amount that an investor invests in a scheme, effective January 1, 2016.

Upfront commission is the payment that a mutual fund agent or a distributor gets from the fund house for selling an MF scheme to the investor. On Wednesday, AMFI members met in the city and decided to act on Sebi's suggestions. In the next few days, the AMFI board will take a final call on capping commissions, officials who attended the meeting told TOI.

Some mutual funds pay upfront commissions of as much as 6% in some closed-ended equity funds, and between 1% and 2% in equity funds. Market regulator Sebi feared that such high upfront commission could lead to mis-selling of mutual fund products and, hence, was insisting on a cap on such payments. A few months ago, a government panel had also suggested rationalizing commissions for selling various financial products. The cap on upfront commission, however, will neither benefit nor affect mutual fund investors, but will reduce the risk of them being induced to invest in unsuitable or wrong funds.

In comparison, commissions in the insurance industry could be as much as 35% for some products. The industry also witnesses a large number of cases of mis-selling, mainly because of the high commission structure.

On Tuesday, speaking at a corporate governance conference in the city, the Sebi chief had said that the regulator had already given "a long rope" to the fund industry to agree to cap distributor commission. He had warned that in case the fund industry didn't agree to such a cap, Sebi would step in to impose a rule. Recently, a Sebi official told TOI that if the regulator was forced to put a cap on upfront commission for selling mutual funds, for any subsequent changes, the industry would have to approach the regulator. In effect, such a step would have curtailed some of the quasi self-regulatory powers that AMFI now enjoyed, the official said.

Latest Comment

Cap on upfront commission on mutual fund investments is a good move. The investors will gain. There should be cap on com... Read MoreMahendra Kumar Nayak

In Wednesday's meeting, AMFI members also decided that in case a fund house pays higher commission and another fund house can prove it, AMFI will 'name & shame' the fund house. This is because AMFI is a trade body which does not enjoy any power to punish its members, and will stop at just naming and shaming the fund house, an official who attended the meeting said. It has been found that some fund houses and MF distributors shared the 14% service tax burden equally, which in effect increased the net commission that accrued to the distributors. AMFI members agreed that in case an MF distributor is found to have taken more than 1% commission, it could summon the distributor for explanation and in extreme cases may also cancel its AMFI Registration Number (ARN), officials said. ARN is a Sebi-mandated requisite number for selling mutual funds.

One of the members also suggested that AMFI could also have an 'advance ruling mechanism'. Under this system, a fund house or a distributor with a smart idea to pay or earn commission could approach the trade body and get its plan approved so that such payments are not seen to be violative of the commission laws later. The proposed mechanism is similar to a tool that is in place for tax payers.

Popular posts from this blog

FDA Maharashtra Directory Contact Moblie Number

Food and Drug Administration Directory  DOWNLOAD JUNE 2021 CONTACT LIST PLZ CLICK ADVERTISEMENT TO SUPPORT THIS WEBSITE FOR REVENUE FROM ADVERTISEMENT Field Office Circle Head (Assit Commissioner Address of Field Office Inspector AHMEDNAGAR A.T. RATHOD (7045757882) 19C, Siddhivinayak Colony,,Near Auxillium School, Savedi,,Ahmednagar - 414003 J.H.SHAIKH (9158424524) AKOLA H. Y. METKAR (9730155370) Civil Line, Akashwani Road, ,Akola ,AKOLA H. Y. METKAR (9730155370) AMARAVATI U.B.GHAROTE (9595829895) Office of the Joint Commissioner,Jawade Compound, Near Bus Stand,Amrawati-444 601 C. K. DANGE (9422844477) AURANGABAD S. S. KALE (9987236658) Office of the Joint Commissioner,,2nd floor, Nath Super Market, Aurangpura,Aurangabad R. M. BAJAJ (9422496941) AURANGABAD Zone 2

हिन्दू शब्द वेदों से लिया गया है ना की फ़ारसी से

  HINDU WORD ORIGIN PLZ CLICK ADVERTISEMENT TO SUPPORT THIS WEBSITE FOR REVENUE FROM ADVERTISEMENT हिन्दू शब्द सिंधु से बना है  औऱ यह फारसी शब्द है। परंतु ऐसा कुछ नहीं है! ये केवल झुठ फ़ैलाया जाता है।ये नितांत असत्य है  ........ "हिन्दू"* शब्द की खोज - *"हीनं दुष्यति इति हिन्दूः से हुई है।”* *अर्थात* जो अज्ञानता और हीनता का त्याग करे उसे हिन्दू कहते हैं। 'हिन्दू' शब्द, करोड़ों वर्ष प्राचीन, संस्कृत शब्द से है! यदि संस्कृत के इस शब्द का सन्धि विछेदन करें तो पायेंगे .... *हीन+दू* = हीन भावना + से दूर *अर्थात* जो हीन भावना या दुर्भावना से दूर रहे, मुक्त रहे, वो हिन्दू है ! हमें बार-बार, सदा झूठ ही बतलाया जाता है कि हिन्दू शब्द मुगलों ने हमें दिया, जो *"सिंधु" से "हिन्दू"* हुआ l *हिन्दू शब्द की वेद से ही उत्पत्ति है !* जानिए, कहाँ से आया हिन्दू शब्द, और कैसे हुई इसकी उत्पत्ति ? हमारे "वेदों" और "पुराणों" में *हिन्दू शब्द का उल्लेख* मिलता है। आज हम आपको बता रहे हैं कि हमें हिन्दू शब्द कहाँ से मिला है! "ऋग्वेद" के *"

RTE & School Quota Of Kalyan Dombivli KDMC Region Thane

 Kalyan Dombivali Municipal Region School Quota and RTE 25% quota details received from RTI reply from KDMC Education department. Almost in all the schools free education seats for income below Rs1lac is vacant .The vacant seats are illegally filled by private school in open category by private schools by taking donations. KDMC education didnot taken any action. Total approved strength of class is 4 times of RTE quota. If RTE 25% quota is 25 then approved students limit is 100 students. Means 75 students from general and 25 from RTE 25% quota. In all the schools students are more than from approved strength and RTE 25% seats are vacant. It means RTE seats are filled by general students. As per RTE Act 2009 poor quota seats ie RTE25% cannot be filled by general quota in any condition and at any class. Helpline 9702859636  RTE Admission