In a letter sent to AMFI, SEBI has said that fund houses cannot pay upfront commission on SIPs registered before October 22.
Earlier, AMFI has sought clarification on the circular issued on October 22, 2018 on the issue of payment of upfront commission on SIPs registered before October 22.
On grandfathering of upfront commission on future instalment of SIPs registered prior to October 22, 2018, SEBI said, “The request of AMFI for exemption for upfront commission for all SIPs registered prior to SEBI circular dated October 22, 2018 is not acceded to.”
However, SEBI has asked fund houses to pay withheld commission to distributors within three months. AMCs have withheld commission including upfront commission for sales recorded before October 22, 2018 due to claw back, ARN renewal pending and so on.
SEBI said, “Regarding payment of withheld commission, including upfront commission for sales pertaining to the period prior to October 22, 2018, the request of AMFI is acceded to. AMCs may be advised by AMFI to make all the withheld payments within a period of 3 months from the date of this letter, subject to fulfilment of all the requirements specified.”
On interpretation of certain selling and distribution payments that include sending distributors on skill development programs and running loyalty programs for them, SEBI said that the market regulator has adequately dealt with these issues. “The issue raised by AMFI has been adequately dealt with in the circular and it is mandatory for the AMCs to follow the provisions of the circular,” said SEBI.
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.
