Distributors have requested to AMFI to consider relaxing the unique identification (EUIN) rules. They want EUIN remediation period to remain 30 days as is the rule currently.
So far, AMCs were holding commission (remediation period) for up to 30 days for transactions received after 1st October if the EUIN was invalid. Distributors were required to provide valid EUIN within 30 day from the end of the month in which the transaction took place. The commission withheld was released by fund houses if distributors remediate it within this period.
From January 01, 2014, this remediation period will be seven days from the end of the month in which the transaction takes place. For instance, all transactions submitted prior to January 01, 2014 have to be remediated from February 07, 2014 and within seven days from subsequent months.
Thus, distributors risk losing their commission if there are unable to provide EUIN within the stipulated remediation period.
“We have told AMFI informally on this issue. We are going to take up the matter through our association soon. We have been telling AMFI that status quo should be maintained on EUIN. Seven days of EUIN remediation period is not adequate,” said A K Narayan, President, IFA Galaxy.
Some distributors say that their EUINs are not getting captured properly at the R&T level.
“It is a major problem faced by distributors. We were asked to provide EUIN even for dividend reinvestment transactions for which EUIN is not mandatory, said Vinod Jain of Jain Investment.
Quoting EUIN in application forms became mandatory from June 01, 2013 for purchases, switch, registration of SIP / STP / DTP / trigger.
SEBI introduced EUIN to address the issue of mis-selling. Distributors have to get EUIN for all employees who advice clients. This helps track the employee/relationship manager if in case of mis-selling. If there is no interaction between the employee of the distributor with respect to a particular transaction, distributors have to get a declaration signed by the investor. (“I/We hereby confirm that the EUIN box has been intentionally left blank by me/us as this transaction is executed without any interaction or advice by the employee/relationship manager/sales person of the above distributor/sub broker or notwithstanding the advice of in-appropriateness, if any, provided by the employee/relationship manager/sales person of the distributor/sub broker.”) If the distributors fail to furnish this declaration to the AMC within the remediation period, their commissions are forfeited permanently.
