SEBI has formed a committee on Disclosure and Accounting Standards (SCODA) to seek recommendation on improving disclosure standards of financial products including mutual funds through offer documents, application forms and advertisements.
The 17-member committee was formed on September 03. Ishaat Hussain, Director-Finance, Tata Sons is heading this committee as the chairman. Milind Barve, Managing Director, HDFC MF is the member from the mutual fund industry in this committee.
The committee will also give its recommendation on improving disclosure requirements of financial intermediaries registered with SEBI like Registered Investment Advisers (RIAs) and stock brokers.
The committee was formed following the recommendations of the Finance Ministry Committee headed by Sumit Bose, former Union Finance Secretary. The committee had submitted the report in August which was made public on September 3.
Among its key recommendations are disclosure of trail commission at the time of sale, past returns (along with benchmark returns) of schemes while selling products, informing all investors when fund manager of a scheme changes and showing retail AUM based rankings. In addition the committee has suggested to put additional disclosure stating that the fund’s performance is subject to fund house/manager’s competence.
