AMFI has asked national distributors and banks advising mutual funds to furnish employee registration status to make sure that they comply with AMFI ARN registration rule
Mumbai: Concerned by reports of non-compliance with ARN guidelines, AMFI has asked national distributors to furnish the status regarding the employees advising clients on MFs. As on March 2011, there are 75,712 ARN holders, out of which 6,303 are corporate ARNs and 37,624 corporate employees registered under these corporate bodies.
“The process has been relaxed lately. The registration is not happening in a proper way,” said a sales head of a national distribution house. Fund officials say that it is difficult to trace an employee who mis-sells a product. Registration with AMFI would help them stem such practices. The matter was discussed in AMFI’s ARN committee meeting held a few months back.
“We have taken up this issue with national distributors. The exercise is in progress. We have asked NDs and banks to identify the number of registered and unregistered employees with AMFI. So far, the numbers look good,” says H N Sinor, CEO, AMFI.
J Rajagopalan of Bluechip Corporate Investment Centre claims that all his employees are registered with AMFI.
“There was a time when an online distributor had only one ARN and many staff on its payrolls were advising on mutual funds without any certification. You cannot have just one license and all the citizens driving a vehicle. Each driver has to have a driver’s license so that they can be punished for any violation of traffic rules. If any mis-selling occurs, there is no mechanism to track the employee,” said a top official of a large fund house.
According to a CAMS-BCG report, private banks, distributor (national, regional and distributor with online presence) and PSU banks held 25%, 36%, and 4% of the AUM of the industry as on March 2010 (only CAMS AUM is considered).
“Employees of corporate (non-individual) ARN holders, who are engaged in marketing of mutual funds products, are required to pass an examination and register with AMFI. The application for registration of corporate bodies should compulsorily be accompanied by the application for registration of corporate employees,” states the AMFI website.
AMFI recently introduced strict registration norms for distributors in the form of KYD.
“I suspect many people are passing the certification test but not registering with AMFI for ARN. There is no mechanism to check how many employees of banks or national distributors are advising mutual funds. Every mutual fund advisor whether it is a bank, national distributor or IFA is required to have an ARN,” said a senior official from AMFI.
The mutual fund distributor’s examination is now conducted by NISM. It charges a minimal fee of Rs 1,000 for this certification. Candidates have to score a minimum 50% marks to pass this test. After clearing this test, they have to register with AMFI which allots a unique ARN valid for a period of three years, effective from June 1, 2010. The license can be renewed after that. The fee for first time registration of corporate employee is Rs 5,000 and Rs 2,500 for renewal. Employees of NDs are allotted a card which contains their photo and name along with the ARN of their employer. Employees engaged in advising mutual funds are registered under the ARN of the company.