SEBI is likely to soon shed light on the payment of withheld commission of distributors.
Two industry officials have confirmed that AMFI has sought SEBI’s clarification on whether the payment of withheld commission directive includes pending KYC cases. “We are expecting SEBI to give us clarity on this before the due date i.e. May 21, 2019.”
On February 21, SEBI had asked fund houses to pay withheld commission to their distributors by May 21, 2019. AMCs withhold commission including upfront commission for a number of reasons such as failed transactions, incomplete KYD, pending KYC, and so on. There is at present confusion among fund houses and distributors if the three-month window given to AMCs to pay withheld commission to distributors applies to assets with incomplete KYC.
A third industry official however pointed out that the SEBI circular in the current form states that AMCs cannot pay withheld commission after May 21, 2019 to distributors including pending KYC cases. Distributors say that completing pending KYCs of clients within three months is a herculean task. There are cases where the client is not in the country or does not live in the home town.
Industry experts believe that many investors who invested before January 1, 2012 did not comply with KYC norms due to frequent regulatory changes.
