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In a letter sent to AMFI, AMFI has asked fund houses not to use training money to run a sales contest like SIP drive or SIP trainings.
AMFI said, “It has come to AMFI’s attention that certain AMCs have launched a special SIP drive under regular plan for a specific period, wherein the mutual fund distributors are offered training program/s at zonal / national location, based on the no. of SIPs/ incremental value of SIPs mobilised from T30 / B30 locations (with certain minimum target). It is also understood that under the SIP drive program, the MFDs are offered “credits” (points) @100% for regular SIPs and @125 % under booster schemes i.e., certain selective schemes.”
AMFI said that training programmes conducted for distributors should not be misused for providing any reward or non-cash incentive to the distributors. It said, “All AMCs are advised against incentivising the MFDs by linking the training programs being offered to achievement of SIP sales targets. Further, AMCs who already have launched (or propose to launch) any special SIP drive under regular plan, wherein the MFDs are incentivised by way of training programs are requested to withdraw such incentive programs forthwith and send a confirmation to AMFI.”
AMCs are not allowed to pay any reward other than commission to their distributors. Also, such a commission has to be paid from scheme i.e. within the distributable TER and not AMC.
While upfronting of trail commission is allowed in SIP inflows, it cannot exceed 1% yearly that too on assets from new investors.
