Any payments (other than commission) made in the form of gifts/rewards, trips, event sponsorships etc. to distributors will be apportioned and displayed at investor/scheme level.
From October 1, AMCs will start publishing distributors commissions in common account statements which also include all marketing expenses incurred on them in the form of gifts/rewards, trips and event sponsorships.
An operations head of a leading fund house said that AMFI has asked AMCs to calculate the commissions based on the average AUM held by investor in each scheme. Here’s how the commissions will be calculated:
Let us assume that IFA Rajesh has two clients, Client A and Client B. Both have invested in scheme XYZ. Client A has invested Rs. 6,000 and client B has invested Rs. 4,000. Rajesh gets 1% commission on the amount invested by client A and client B. The AMC has also spent Rs. 100 on Rajesh as marketing expense. So this marketing expense (Rs. 100) will be apportioned to both investors (client A & client B). Based on 1% commission and after factoring the marketing expense, the CAS will show that Rajesh has received 110 from client A, which is Rs. 60 as commission and Rs. 50 as expense. Similarly, client B’s CAS will show that Rajesh has received Rs. 90 (Rs. 40 commission and Rs. 50 as marketing expense).
Here’s how Rajesh’s commission structure would like:
The commissions will be disclosed on absolute basis with no break up of other expenses incurred on distributors.
The operations head of a foreign fund house said that SEBI has asked AMCs to calculate the commission + expenses incurred on each transaction which is not feasible. Hence, AMFI has come up with a formula to calculate it based on the average AUM of investors in each scheme. AMFI has said that any payments (other than commission) made in the form of gifts/rewards, trips, event sponsorships etc. to distributors needs to be apportioned and should be displayed at investor/scheme level. The commission disclosed will be on ‘paid’ basis excluding clawback. The clawback amount will be shown at each ARN level, which can be a positive or negative number.
This CAS will be sent to both – investors who have transacted and not transacted during the half yearly period. Investors who have done their KYC through depositories will get the CAS from NSDL/CDSL and those who have done KYC through distributors will get it from Manipal Technologies, a printing press appointed by AMFI to dispatch CAS.
Here is the CAS format prepared by AMFI. Click on the icon to download the file.
