AMFI is likely to question fund houses who have not adhered to the best practices guidelines on new commission structure. The final decision will be taken at AMFI board meeting scheduled to be held on Tuesday, said a board member on the condition of anonymity.
“Apart from regular reporting, AMFI will specifically ask the reason behind not adhering to the best practices circular from those fund houses that are reportedly not complying with it. This is affecting our business. AMFI should ensure better enforcement of such guidelines,” said the official quoted above.
Another board member said that fund houses usually submit a periodic report approved by AMC’s board of directors on compliance with the best practices guidelines. The above question can be a part of this disclosure.
A few days back, AMFI has reportedly approached SEBI seeking its recommendations on how to ensure compliance of best practices circular on commission among all its members. Sources said that this decision has been taken post the meeting.
Earlier, AMFI had issued its best practices circular to AMCs in which it had asked fund houses to discontinue ‘upfronting’ of trail across all schemes. Also, it has put a cap of 1% on upfront commission and given freedom to fund houses to decide trail commission within the distributable TER.
H N Sinor who was the then CEO of AMFI had told Cafemutual that 35 fund houses were adhering to the new commission guidelines. However, a few fund houses including Sundaram, JP Morgan, HSBC and Baroda Pioneer are reportedly not adhering to AMFI’s best practices guidelines.
