The Competition of Commission of India (CCI) has sought details from SEBI on upfront commission cap to check whether such a cap amounts to cartelization, said a report published in Hindustan Times.
Ashok Chawla, Chairman CCI has confirmed this development to the newspaper and said that the examination is at a nascent stage.
Earlier this month, the Hindu Business Line reported that the CCI is investigating AMFI’s decision to cap the upfront commission at 1%.
CCI is said to have received numerous complaints from distributors across the country. In one such letter, a distributor has allegedly written that capping upfront commission can badly affect small distributors resulting in unfair competition in the market. Also, such a cap may discourage new people to enter the mutual fund distribution business.
In March, AMFI issued its best practice circular to AMCs in which it has asked fund houses to put a cap on upfront commission at 1% and no cap on trail commission. AMCs can decide the trail on their own but it has to be on perpetual basis. Also, AMCs have a choice of not paying any upfront and adopting full trail model. The new commission structure has come into effect from April 1.
