MF News AMFI approaches SEBI on advertisements that offer bonus on Amazon Gift Cards

AMFI approaches SEBI on advertisements that offer bonus on Amazon Gift Cards

While AMFI code of conduct for MFDs clearly says that distributors cannot offer discount, passback or bonus to investors in lieu of MF investments, there is no such guidelines for RIAs as they do not receive commission.

Team Cafemutual Aug 7, 2020

AMFI has approached SEBI seeking appropriate action on advertisement posts of RIAs that offer bonus on Amazon Gift Cards in lieu of MF investments.

AMFI said, “There has been flurry of WhatsApp messages and e-mails on the advertisement by Kuvera and Orowealth in various groups and AMFI. We have forwarded Kuvera and Orowealth advertisements to SEBI for appropriate action as RIAs come under direct purview of SEBI.”

Expressing its concerns, AMFI further said, “At AMFI, we want level playing field between RIAs and MFDs. Such short cuts are likely to undermine spirit of SEBI guidelines and hence it is important to stop such things.”

Both Orowealth and Kuvera have posted an advertisement on social media that says if investors invest in liquid funds with certain amount between certain dates, they can avail Amazon Gift Card with 3% extra value or bonus.

Currently, while MFDs cannot offer passback or bonuses to their clients in lieu of MF investments, there is no such guidelines for RIAs as they did not receive commission from AMCs, believe industry experts.

AMFI code of conduct for MFDs says, “Intermediaries shall not rebate commission back to investors and abstain from attracting investors through temptation of rebate/gifts etc.”

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13 Comments

Vivek Gutka · 4 years ago `

Does this indicate, the AMCs are incentivising RIAs and Direct Fund Distrubutors indirectly?
There is a difference in the Expense Ratios of Direct & Regular Plans, technically it is suppose to be the Brokerage paid to the MFD, however, the difference is larger than the Brokerage paid, now everyone can know why.
AMCs seem to be hiding their costs towards promoting Direct Plans under the Expense Ratios of Regular Plans.
SEBI also seems to be turning a Blind Eye to this issue.
To promote transparency, there should be a uniform Pay-out structure for all MFDs and no difference in the expense ratios over the Brokerage paid.
Does the AMCs AMFI & SEBI have the guts to do this, or are they hand in glove in this issue?

Santosh Shetty · 4 years ago

I don't understand the logic of pulling up someone for an 'offer' on the guise of commissions when forever , the consumer's been at the receiving end of partisan advisory dished out without an iota of accountability on outcomes.

The problem here is with those losing out their so called 'commissions' and therefore opposing anything that is 'direct' and empowering the consumer!

Lalit Kothawade · 4 years ago

Indians like free advisory! There is no need to empower consumer. Those who are really interested can empower themselves anyways. Also, direct investors are turning to direct stock investments due to lacklustre performance of mutual fund schemes which were also advised by advisors.

Advisory module can't help poor people if we need to give them equity exposure. Current commission structure is way affordable in India.

Mr Gutka is urging to bring transperancy and uniformity in distribution space. Nothing wrong! So called 'fees' should not be charged and free advice can be given to empower consumers!!

narayanan · 4 years ago `

something definetely wrong

Indrajit sarkar · 4 years ago `

Raised voice about nepotism

Vijay Deore · 4 years ago `

Switch from Direct to Regular plan or our ARN code not available on any AMC portal/NSE.

but many online platform having facility of switch from Regular to Direct plan.
This is injustice on MFD part....AMC should stop this partiality.
All MFD raise a Concern with all AMC representative.

daxesh thaker · 4 years ago

Yes agree this is totally injustice. Direct selling of mutual fund is gross violation of ethical pricipal that AMC being the trust to Mutual fund asset promoting their own product and selling them directly. There should be equal opportunity of switch from direct to regular as like that of regular to direct.

Bhupinder · 4 years ago `

Both AMFI and SEBI are conducting frauds with investors by implementing their completely nonsense guide lines and are implementing stupidity instead of clearity. With their blind vision they are not aware that instead of giving benefit to investors all their activities are actually giving losses to Indian investors, they are completely not aware of ground realities. It will take lots and lots of time to explain my view but in short SEBI and AMFI both needs to be booked at Supreme court, because, we being distributors are not having rite to question Regulators but Supreme court being a Supreme commander is having power to question and to teach both these stupids.

Bhupinder · 4 years ago `

Professionals does not need any explanation they only need understanding, and that is what I expects from all the readers.
Thanks

daxesh thaker · 4 years ago `

Offering free bees and bonus, it is clear passback of commission in indirect way. There should be appropriate action against these.

Shivkumar Kalra · 4 years ago `

Na kal ka raaja Brahmin se jit paya tha, Na aaj ka raaja Brahmin se jit paya hai. Hamara system band kar diya, bank ka system aaj bhi chalu hai. IAS jaisi degree lekar bhi agar ek ka pet katke ekko khila ke, 18 mahine ki pagar mangni padti hai, to hum (me) anpad hi ache the.

Akhand Pratap singh · 4 years ago `

Request to AMCs if possible please provide some additional brokerage to IFAs.only when any IFA try to do invest through digital tools like ur partner apps or cams edge 360... Bec I think due to Covid Digital platform is more active the offline so for the promotion of digitization think about extra R&R for IFAs.

JAGENDRA KUMAR MEHTA · 4 years ago `

RIA s has miltiproduct services sometime they use investor for marketing/servicing other products too.

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