Sinha says SEBI would hesitate to directly prescribe the commission and would be happy if the industry does it on its own.
SEBI chairman UK Sinha has expressed his concern over the high upfront commission paid to mutual fund distributors and expects AMFI to put a cap on such commissions soon, says a PTI report published in ‘The Hindu’.
At a public forum today, Sinha said, “SEBI would hesitate to directly prescribe the commission and would be happy if the industry does it. SEBI has a concern that if a disproportionately large amount of commission is being paid, and certain anomalies have crept up, SEBI is uncomfortable.”
The announcement has come at a time when AMFI is reportedly set to put a cap of 1% on upfront commission from April 1. Also, AMFI is said to have proposed two commission structures for distribution – upfront plus trail and all trail model. There is a suggestion to cap upfront commission at 60 basis points of net total expense ratio (TER).Cafemutual has carried an article explaining both the proposed models on Wednesday. Click here to read.
The final decision on commission structure will be taken next week.
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