AMFI has toughened ARN renewal norms for mutual fund distributors.
From August 1, 2020, AMCs can give your clients to other distributors or simply shift their assets in direct plans if a distributor does not renew his ARN within 3 months of expiry of his ARN.
Further, if a distributor does not renew his ARN within 6 months of expiry, AMFI will permanently cancel his ARN. AMFI will not issue fresh ARN to such distributors again.
In its best practices circular on AUM transfer of distributors, AMFI said, “If a distributor’s ARN has expired and he/she does not renew the ARN within 3 months, the AMCs may write to clients to choose another distributor for servicing and inform the AMC to change the ARN code in the client’s’ folios or switch to direct plan. Further, if the distributor does not renew the ARN within 6 months after expiry of the validity, the said ARN may be deemed to be cancelled and no fresh business should be accepted / registered under such ARN.”
So far, AMFI norms do not stipulate any timeline to renew the ARN. However, if you renew your ARN later than six months from the date of expiry, AMCs will forfeit or write off your trail commission. Once you renew your ARN, you will continue to get trail commission on your previous assets i.e. assets that you built before the expiry of your ARN.