Foundation of Independent Financial Advisors (FIFA) has urged AMFI to set up a fixed date, applicable universally, for monthly disbursal of commission of distributors.
This came after delay in brokerage payout of April following the implementation of new TER regime. A few fund houses have also written to distributors about the delay. In one such communication, a large fund house said, “Given the impact on TERs basis the new AUM slabs, we have applied the commission rate changes on your existing assets as well. In view of the above changes, we are anticipating a delay in processing commission payment for April 2019. Request you to bear with us in the interim.”
Such a delay is not new. Earlier, the MF industry had delayed brokerage payout in August and October 2018 due to incomplete KYC and implementation of all-trail model, respectively.
Most fund houses credit brokerage on the 10th of every month.
In a communication sent to AMFI, FIFA said, “Majority of IFAs who are small and medium sized, payment of commission on a stipulated date is mandatory to meet their domestic/living expenses, home loan, EMI payment etc. After the constant reductions in TER, changes in upfront commission payments and reduced business scenario there is already considerable anguish that these IFAs go through and a delay in the commission to be received creates further panic.”
A Mumbai IFA requesting anonymity told Cafemutual that while a few AMCs have credited trail brokerage, most of the fund houses are yet to pay the brokerage. He said, “It is difficult for IFAs like us to meet recurring business and household expenses. I think one way to pay brokerage in such a scenario is to disburse trail commission on old assets first and pay trail commission on incremental assets later. This will ensure that IFAs will get at least some money to run their businesses.”
