IFA Associations including IFA Galaxy, Pune Investment Advisor Association (PIAA) and Foundation of Independent Financial Advisors (FIFA) are meeting a few members of Sumit Bose committee to share their feedback on the changes proposed by the committee.
Sources said either Prithvi Haldea, Chairman, Prime Database or Monika Halan, Editor, Mint Money, would be a part of this meeting, which is scheduled to be held in Mumbai tomorrow.
A K Narayan, President of IFA Galaxy and Dhruv Mehta of FIFA will attend this meeting, they confirmed. This is the first meeting where IFA Associations will share their feedback with Sumit Bose committee members directly.
FIFA has already submitted its consolidated feedback received from other local/regional associations of IFAs to SEBI.
One the most talked about recommendations of the committee is on reducing trail model, which distributors have strongly opposed.
Here are some of the other recommendations of the committee.
Recommendations related to product structure:
- Merge similar schemes to reduce confusion among investors
- Benchmarks should be made more relevant and schemes should be periodically tested to see if the asset allocation is conforming to the benchmarks
- Schemes should remain true to label
- Promote ETFs among retail investors
- Similar to insurance, introduce free look policy in mutual funds
Recommendations on disclosure:
- Penalize distributors pitching NFOs as cheap products on the basis of highlighting NAV “at par” value of Rs.10.
- Disclose past returns (along with benchmark returns) of schemes while selling products. Investors should be disclosed a range of past returns appropriate to the product tenure and should include returns of last 6 months and annualized returns since inception and 2 year returns thereafter
- Disclose trail commission to investors at the time of sale
- In addition to the disclosure of scheme performance subject to market risk, put additional disclosure stating that the fund’s performance is subject to fund house/manager’s competence
- Inform all investors when fund manager of a scheme changes
- The AUM rankings published by AMCs on their websites, information memorandum etc. are presently combined for all products which give a misleading picture. For retail products, the AUM rankings should be shown only for the retail AUM.
