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Acting tough against the errant distributors, AMFI said that it will take strict disciplinary action against MFDs who have split application to earn high transaction charges and churned investment to earn additional commission in lieu of B30 incentives.
In a communication, AMFI said, “All MFDs are strictly advised to ensure that they do not collude or undertake any malpractices such as splitting of applications, churning of mutual fund investments or any other activities to circumvent the guidelines to earn higher transaction charges and/or to earn higher B-30 incentive commissions. Any violation in this regard shall be viewed seriously, and shall be liable for strict disciplinary action against the errant MFD, which may include suspension of ARN or permanent debarment and cancellation of ARN.”
Earlier, SEBI has asked AMFI to temporarily bar fund houses from charging additional expenses in lieu of B30 retail assets for a month. This suspension will be lifted once fund houses put in place a mechanism to monitor and track misuse of B30 incentive norms.
This has come after SEBI found inconsistencies in implementation of B30 norms by both – AMCs and distributors. The market regulator found instances of splitting of transaction and churning of investments by distributors and mis-calculating B30 expenses and charging B30 expenses at their discretion by AMCs.
