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AMFI has directed MFDs having sub brokers and employees not to run any competition related to achievement of business scale or sale.
This has come after SEBI found images of sales promotion campaign run by mutual fund distributors. In these campaigns, MFDs reportedly offered foreign and domestic trips to their sub distributors and employees for mobilizing certain business in select MF schemes.
In a communication, AMFI said, “SEBI had taken a stern view of the above and had conveyed its displeasure in the matter to AMFI and directed AMFI to look into the matter. The matter was deliberated extensively by AMFI ARN Committee as well as AMFI Board and the matter was also discussed by AMFI with SEBI.”
AMFI clarified that MFDs having sub broking model can only pay trail commission in monetary terms.
Further, MFDs may conduct training programs for their employees (EUIN holders) and sub-distributors within reasonable expenses within a location in India, which is conveniently/ centrally located from logistical arrangements and cost perspective and not at any exotic tourist destination, said AMFI.
Such a requirement will be relaxed if the program is held to recognise employees/sub distributors and, which is not limited mutual funds. The recognition should consider other regulated products like deposits, insurance, PMS, AIFs and so on subject to approval of MFD’s compliance officer.
The compliance officer will have to ensure that such a recognition does not lead to undue product bias or aggressive selling, said AMFI.
Last week, AMFI advised fund not to conduct training programs for their MFDs in exotic locations like foreign countries and popular tourist destinations. Instead, AMCs were asked to look at doing such programs in centrally located and logistically convenient locations within the country
