A large number of employees and relationship managers of banks advising MFs to clients will now get a unique identity number.
SEBI has allowed AMFI to assign a unique identity number to employees of distributors advising investors till October 31st instead of its original deadline of 1st October. It has also allowed AMFI to implement the new change in transaction charges from 1st November.
All IFAs, national distributors and banks who have appointed relationship managers and sales personnel who advise clients are likely to fall under the purview of this rule. Industry officials believe that the idea behind this move is an attempt to check mis-selling. SEBI’s code of conduct for intermediaries state that all employees/RMs dealing with investors are required to be AMFI/NISM certified.
Further, SEBI has asked AMCs to have
a provision in the application forms for disclosing the unique identity number
of sales personnel along with the ARN of the distributor. AMCs will have to
tweak their application forms to capture the new unique identity of distributor’s
employees. Most AMCs currently capture broker, sub-broker code and branch code
(in case of banks) in their scheme application forms.
“Onus should not be only on the
client or AMC. It should be on the distributor as well. It is not to crucify
anyone but it is to make sure that people take responsibility and give the
right advice. Sometimes clients also take their own call by investing in certain
schemes, going against distributor’s advice,” said Y Jawahar, VP & head of
distribution, Mata Securities.
AMFI could assign this task to
R&Ts.
Transaction charges
SEBI has also allowed distributors to
either opt in or opt out of transaction charge based on product type. However, it has not defined whether it will be
universal option to opt in
or opt out for all schemes falling under each broad category like debt or
equity. For instance, can a distributor opt in for ELSS and opt out for
diversified equity funds?
Distributors have an option to change their status twice a year. Meanwhile, distributors have welcomed the move. The change is beneficial for distributors catering to a diverse set of clients. They can now, for instance, opt out for debt funds in which most corporate clients invest and opt in for equity funds which are sold mostly to retail clients.
The transaction charges, when it was introduced by SEBI, had not enthused IFAs who found the incentive too meager. Out of the 40,000 KYD compliant distributors, around 6,000 had opted in. A number of banks had opted in for transaction charge but later opted out due to technical reasons.
