The CEO of a public sector fund house has shot off an e-mail to AMFI and CEOs asking them to disclose names of AMCs who paid advance commission to large distributors to SEBI.
The reported move to pay advance commissions to large distributors by some AMCs has not gone down well with some peers.
Sources say that the chief executive officer of a public sector fund house has shot off a letter to AMFI and other CEOs demanding AMFI to disclose the names of AMCs who reportedly paid advance commissions to large distributors to SEBI. The CEO has asked AMFI to request SEBI’s intervention in this matter.
A few AMCs are said to have paid out advance commission to national distributors in order to beat new cap ahead of its implementation from April 1.
A senior industry official said, “Though we have agreed to adhere to the proposed commission structure, it should be implemented in true spirit. A few large AMCs have reportedly paid out advance commissions to national distributors to beat the cap. Such practices are not in the interest of investors and the industry. It’s not in the true spirit of business and the proposed guidelines.”
Another chief executive officer of a private sector AMC who received the email is of the view that this is an unethical business practice. “A few large AMCs are said to have paid advance commission of two years to distributors. These distributors are likely to pitch schemes of such fund houses which would eventually affect mid-sized and small AMCs. This is a clear case of mis-selling.”
A senior official of a foreign fund house said, “Since a CEO has shot off an official letter, we are hopeful that SEBI and AMFI will take necessary action against fund houses which paid advance commissions.”
Sources said that a group of national distributors, particularly banks, had met large AMCs to discuss the implication of new commission structure earlier this month.
