Fund houses are unlikely to disburse your trail commission on assets with incomplete KYC. In their latest communication to distributors, a few fund houses have said that SEBI has asked them to hold brokerage where client KYC is pending.
In one such communication, a fund house said, “This has reference to directives issued by regulatory authorities regarding KYC (Know Your Customer) requirements for mutual fund investments. As you may be aware, compliance with KYC and submission of certain other information was made mandatory. As a continuation of this, AMCs have now been advised by the regulator to hold brokerage accruing on investors whose KYC status has not been updated as on date of brokerage payment.”
With this, R&T agents such as CAMS and Karvy have shortlisted the status of KYC of your clients based on two key parameters - investor has not completed KYC with any of the KRAs and he has not done any transaction with the fund house subsequent to completion of KYC depending on previous norms.
In fact, R&T agents have facilitated a quick view of the list of clients whose KYC is not updated as on date. CAMS has shared details of clients with pending KYC through an email. You can download this file by using password mentioned in email.
Many fund houses have requested distributors to complete KYC of their clients at the earliest. “We urge you to complete the KYC process of those clients who are yet to complete the same / submit KYC updation request along with KYC acknowledgement from the client if the KYC has been completed,” said a large fund house in its communication to distributors.
Earlier, SEBI had found irregularities in practices of fund houses during its inspection carried out between April 1, 2014 and March 31, 2016. One such irregularity was payment of trail commissions to distributors on assets with incomplete KYC.
Experts believe that many investors who invested before January 1, 2012 have not completed the requirements due to frequent changes.
