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24 Mar 2011 12:00 AM
SEBI asks AMCs to implement sales guidelines for national distributors 
A Staff Writer
 

IFAs not likely to be a part of this compliance process

SEBIMumbai: In a bid to check mis-selling by distributors, capital market regulator SEBI has written to AMCs to identify each category of distributors and put in place a sales process which has to be adhered to by distributors.

This issue was discussed by the members of SEBI Mutual Fund Advisory Committee last year on ‘Right Selling vs. Mis-selling’. The guidelines would require profiling products aligned with the risk appetite of investors. The members had also proposed recording calls made to clients for canvassing a product. Distributors will also need to take an acknowledgement receipt from investors.

The rules are believed to be meant to be implemented by national distributors first.

Regulating IFAs across the country is a tough task for the industry. IFAs, according to fund officials will be out of the purview of this process. However, they do not rule out the possibility of such a move going ahead.

“SEBI is asking us how we are raising the bar to protect investor interest and check mis-selling," said a sales head of a leading fund house.

The rules require lot of documentation to be done on the part of distributors. AMCs will have to first update SEBI on the type of distributor they are dealing with. AMCs will then communicate the formal sales process to their distributors. The rules are likely to result in extensive documentation for institutional distributors.

Cafemutual had earlier reported about SEBI’s plan to monitor distributor practices.

 
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