Nominees of mutual fund distributors can now get commissions on ongoing SIP transactions and they need not hold ARN license.
AMFI has agreed to a longstanding demand of mutual fund distributors to allow their nominees to get commissions even if they don’t hold an AMFI Registration Number (ARN). So far, nominees of mutual fund distributors were not entitled to get commissions if they did not hold an ARN.
In a circular issued on March 28, AMFI has said that the nominees will also be entitled to get trail commissions on ongoing SIP installments even after the death of the ARN holder. AMFI has clarified that no new systematic transactions or changes to existing systematic transactions can be registered under the ARN code of the deceased distributor.
In cases where an ARN holder has procured business before the demise and has yet not received commission from an AMC, commissions will be paid to the legal heir or the nominee till the time the ARN code of the deceased distributor is not changed by the investor.
AMFI has encouraged AMCs to urge distributors to provide their nomination details in order to reduce the unnecessary hurdles which the legal heirs of a deceased distributor face in obtaining legal heir certificate.
In cases where nominees are registered, nominees can get commissions without the requirement of legal heir certificate or succession certificate. Nominees need to just submit a copy of death certificate.
Distributors have welcomed the move. “I inherited my father’s AUM and he had not nominated anyone and the AMCs were not paying any commission to us on those assets. Back in 2002, there was no provision for an ARN holder to appoint nominee. Insurance companies provide commission to nominees of their agents even if they don’t have a license. As long as nominees provide service to their ARN holders clients there is no reason why they should not be entitled to commission,” said Nikhil Naik of Naik Wealth.
Back in 2004, some AMCs were providing nomination facility to their distributors. AMFI subsequently asked all AMCs to follow a uniform practice of providing nomination facility.
AMCs will keep paying commission to the nominee till AUM under the ARN of the deceased ARN holder becomes nil. Commissions will be only paid to the nominee if the business is generated when the ARN was valid and had not been suspended by AMFI. Also, the ARN of the distributor should be valid on the date of demise of ARN holder.
Nominees are not allowed to transfer the assets in their account unless they have the permission from investors. If the nominees have received permission to transfer assets to their accounts, the nominees should hold an ARN.
Nominees have to inform AMFI about the death of the ARN holder by providing a death certificate duly attested by gazette officer. AMFI will then inform all the AMCs about the same.
Read the circular here.
