AMCs can no longer pay upfront commission even on assets that you have brought before October 22, 2018.
In a recent clarification, SEBI has asked fund houses not to honour their commercial commitment that they have made to distributors before the implementation of ban on upfront commission.
SEBI said, “The request of AMFI to honour the commercial commitments made to distributors prior to the date of the circular is not acceded to.”
Earlier, AMFI had asked SEBI if fund houses could compensate distributors with upfront commission from AMC books if they have made a commitment prior to the implementation of ban on upfront commission. AMFI requested, “It will be in order for AMCs to honour commercial commitments made to distributors prior to the date of the circular and such payments will not be subject to conditions prescribed in the circular.”
A CEO of private fund house feels that the move will affect large distributors such as banks and NDs. “A few AMCs have committed to pay large sums of money to large distributors such as banks and NDs prior to implementation of ban on upfront commission. In fact, the amount at stake is much higher than that of upfront commission on SIPs registered before October 22, 2018.”
