Listen to this article
One of our readers wrote to us with this query:
I did an ARN transfer for one of my clients from a different ARN to mine.
My ARN transfer request was submitted on October 2, 2024 and was completed on October 3, 2024.
I waited for the trail commission to be credited after 6 months. Accordingly, I expected the brokerage credit to reflect in the first week of May 2025, since 6 months had passed in April 2025.
However, when I checked with the fund house regarding the non-credit of brokerage, they informed me that I am not eligible. The reason cited was that an earlier ARN transfer had taken place in February 2024, and the circular related to ARN transfer brokerage was issued in March 2024.
Could you please shed some light on this?
Aflatoon, ARN-275194
Dear Aflatoon,
Thank you for writing to us.
As per AMFI norms, in the case of an investor-initiated change of ARN code, the trail commission rate payable to the new distributor will be the lower of the old and new distributor’s rate.
The first transfer occurred before the implementation of the new Best Practices Guidelines, which allowed AMCs to pay trail commission to MFDs when a client transfers assets from one MFD to another.
Before March 2024, AMFI did not permit AMCs to pay trail commission to the new distributor if the investor initiated the transfer of assets.
In this case, the new distributor was not eligible for any trail commission at the time of the first transfer in February 2024.
Practically, there was no base rate, and hence, AMCs cannot pay any commission to you.
Ideally, MFDs should be mindful of this before recommending that clients change their ARN.
Since this is an exceptional case, you may consider reaching out to the AMFI ARN Committee with your request.
Regards,
Team Cafemutual
