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24 May 2012 07:10 AM
Revised: AMFI committee recommends that an IFA’s nominees should receive trail commission  
Pallabika Ganguly
 

Panel wants non-certified nominees to receive all dues on commissions as also commissions on SIP investments.

According to a current SEBI rule – “the nominee of individual distributor will receive trail brokerage/commission on business done before the demise of the distributor holding ARN card. The nominee will not be entitled for any brokerage/commission on SIP (Systematic Investment Plan) instalments post demise of Distributor.” Therefore an IFA’s nominee who does not have an ARN and NISM certification cannot receive trail commission on the business acquired after the death of an IFA. Moreover, SEBI does not allow any non AMFI certified broker to receive trail brokerage and this rule is applicable even for IFA’s nominee.

The IFA fraternity has been seeking changes in this rule, so that his/her non- AMFI certified nominee continues to receive further trail till the time the investments are not redeemed. Sources in the know have confirmed to Cafemutual that the AMFI Committee on Registration of Certified Distributors has now taken a clear stance and recommended a modification to this rule.

Sources familiar with the development told Cafemutual that the committee has written a letter to SEBI, requesting the regulator to change the rule and allow the further trail commission to be paid to the individual nominee after the demise of the IFA till the tenure of the investments even if the nominee is not an ARN holder. The nominee should also be paid the due upfront commission and trail commissions on SIP investments till the time the investment is held, the AMFI committee has said.  

 “The nominee should rightfully get the trail commission whether he has an AMFI certificate or not. In insurance, the nominee receives the commissions till the end of the tenure even if he is illiterate,” says Ramkant Mahawar, an IFA from Kolkata. 

Manoj Garg, Managing Director, Simply Invest sums up the IFA sentiment perfectly on this issue. “If the rule is changed, then an IFA’s family will receive sustainable income even if he passes away. We will be glad if SEBI reviews this regulation and carries out the needful changes,” says Mano.

 
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