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AMFI has temporarily barred fund houses from charging additional expenses in lieu of B30 retail assets with effect from February 24, 2023.
The temporary suspension will be lifted once fund houses put in place a mechanism to monitor and track misuse of B30 incentives by distributors/AMCs, clarified AMFI. The new system will track instances of splitting of transaction, churning and calculation of B30 incentives.
This has come after SEBI has found inconsistencies in implementation of B30 norms. The market regulator found instances of splitting of transaction, churning of investments, inconsistency in calculation of B30 incentives including switch transaction and charging B30 incentive only in specific schemes instead of charging it across all schemes.
In a circular, AMFI said, “SEBI has stated that it is desirable to keep the B-30 incentive structure in abeyance till AMCs put in place effective controls to identify and take action against wrongdoing so as to address the abovementioned concerns of SEBI, and has advised AMFI to revert to SEBI after ascertaining the compliance by the AMCs, within one month from the date of the above letter. Based on the aforesaid review and implementation of appropriate mechanisms, the incentive structure will be appropriately re-instated by SEBI with necessary safeguards.”
Currently, AMCs can charge an additional 30 bps for bringing retail application of up to Rs.2 lakh from B30 cities. Fund houses use this additional TER to incentivize distributors for bringing retail investors from B30 cities.
