In a letter sent to SEBI seeking clarification on the circular issued on October 22, 2018 that has banned upfront commission, AMFI has requested the market regulator to allow fund houses to pay upfront commission on SIPs registered before October 22.
On grandfathering of upfront commission on future instalment of SIPs registered prior to October 22, 2018, AMFI said, “Many AMCs had SIP brokerage structures which had a component of upfront commission to be paid for every SIP/STP instalment. It is requested that AMCs be permitted to continue paying such commission on SIP/STP registered prior to the date of the circular.”
AMFI has further sought clarification from SEBI if fund houses are right to interpret that they can send their distributors on skill development programs. AMFI said, “Management programs at leading institute for distributors, either in India or overseas to help them build their knowledge and business, in order to better serve customers.”
On loyalty programs, AMFI has sought SEBI’s help to understand if such programs would fall under non-cash benefits. Distributors earn certain points based on AUM/inflows with AMCs under loyalty programs. Such distributors are entitled to receive non-cash benefits from AMCs.
The new SEBI rule says that training sessions and programs conducted for distributors should be continued but not misused for providing any reward or non-cash incentive to them.
