SEBI’s 14-member Mutual Fund Advisory Committee (SMFAC) will take up Bose committee’s recommendation in its forthcoming meeting scheduled to be held on Thursday, confirmed two committee members.
Earlier in November 2014, the Finance Ministry had constituted a nine-member committee to review distribution incentives across financial products, rationalize commission structure and recommend measures to curb mis-selling. The committee, headed by Sumit Bose, former Union Finance Secretary, had submitted the report in August which was made public on September 3.
Among its key recommendations are doing away with upfront commission and practice of ‘upfronting of commissions’, introduction of reducing AUM based trail commission and leveling commission across T15 and B15 distributors.
The SMFAC committee will also discuss compensation structure of the key AMC personnel. The key personnel of AMCs include CEOs, CIOs, sales heads, compliance officers and chief operating officers.
Also, the advisory committee is likely to give its recommendation to expedite scheme mergers. Earlier this month, SEBI Chief UK Sinha has reportedly urged fund houses to consolidate schemes having similar fundamental attributes. Sinha bemoaned that hardly any AMCs had put efforts to merge their schemes even after complete clarity on taxation and commission structure.
SMFAC was constituted in 2008 under the chairmanship of C B Bhave. The committee was reconstituted in 2011. The committee advises SEBI on development, disclosures and regulatory aspects of the mutual fund industry. The committee has been instrumental in taking up many initiatives which have left a lasting impact on the industry.
