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One of readers wrote to us with query:
Recently, I read an article on Cafemutual about AMCs paying trail commission to the new distributor if investors initiate transfer of assets. In this context, I have two questions:
- Whether the new ARN transfer norms will be effective retrospectively? Such a transaction happened in November 2023. Will this be eligible for trail income?
- Second, what happens to the commission accrued during cooling off period? Am I eligible to receive it post six months?
Name withheld on request
Dear MFD,
AMFI has issued best practices guidelines in which it has allowed AMCs to pay trail commission to MFDs if a client transfers his assets from one MFD to another. This circular has come into effect from March 5, 2024.
Hence, the transfer of assets prior to March 5, 2024 will not be eligible for the trail commission.
Also, AMCs can only pay trail commission after cooling off period of six months from the date of transfer of assets by investors.
To put it clearly, the new distributor will not get the accrued trail commission. This also means that the new distributor will be eligible to get trail commission starting from the seventh month.
The commission accrued during the cooling off period will go towards investment awareness.
Hope we have addressed your query.
Regards,
Team Cafemutual
