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Ever since AMFI announced that it will suspend ‘opt in’ distributors who split application to charge transaction fee multiple times for six months from doing fresh business, many MFDs sought clarification on the splitting of application.
While many MFDs want to understand if multiple transactions across various schemes within a fund house will be considered as splitting of application, other wants to know if splitting across equity and debt funds within a fund house to do asset allocation fall under the scanner.
RTAs have confirmed that ‘opt in’ MFDs who split MF application in the same scheme on the same day per PAN will come under scrutiny. This includes splitting between options available within the scheme – growth or dividend.
For instance, if an investor wants to invest Rs.5 lakh and his distributor recommends him investment in the same scheme through five applications of Rs.1 lakh each, such a distributor will come under the scanner.
However, if ‘opt in’ MFDs recommend multiple schemes of a fund house or schemes of different fund house even in a single day or if investments within the same scheme spread across days, it will not be considered as spitting of application.
Last week, AMFI said that distributors who have violated ‘opt in’ norms cannot do lumpsum business for six months.
In fact, AMFI has asked RTAs to recover the transaction fees from erring MFDs and credit it to investors awareness fund. In addition, AMCs will have to issue units of MF schemes in lieu of such deduction.
Distributors can levy a transaction charge of Rs.150 for getting a new investor and Rs.100 from existing investors if they mobilize Rs 10,000 or above. In SIPs, transaction charge is deducted in 4 instalments starting from the second month provided the total commitment amount is Rs.10000.
‘Opt in’ norms say that distributors are not supposed to split investments to earn more transaction charges.
