AMFI is likely to revise its best practices on commission structure of distributors soon, confirmed three CEOs who are on AMFI board.
Since SEBI has banned upfront commission on October 22, 2018, the existing best practices on commission structure of distributors has become redundant. Hence, AMFI has started reviewing the existing best practices circular to update guidelines, said the CEO of a large fund house.
Another MF CEO told Cafemutual that AMFI would form uniform guidelines on trail commission payouts of distributors to create a level playing field across fund houses. He, however, said that AMFI would come up with the best practices circular only after April 1, 2019 i.e. after implementation of the new TER slabs.
Earlier, SEBI has reportedly expressed its concern over steep difference in trail commission payouts and asked fund houses to pay uniform trail commission across the investment tenure. The market regulator is said to have found that a few fund houses have been paying higher trail commission in the first year and lower in subsequent years. SEBI feels that it will go against the spirit of circular to ban upfront commission, said sources.
