A few fund houses have reportedly recommended that distributor commissions should be disclosed in investor account statements. This will be discussed in the forthcoming AMFI board meeting on January 21, said two people familiar with the development.
“This has been proposed by two members of the AMFI board. It will be discussed in the upcoming board meeting,” said a senior official requesting anonymity.
“It is just to increase transparency. It will show whether the fund has been sold for hefty commissions or for performance,” said an AMFI board member.
Currently, account statements captures details like folio number, KYC details, investment amount, capital gains or loss etc. If the proposal goes through, fund houses may have to disclose the commission received against each scheme.
Last year, the Sumit Bose Committee had proposed to introduce a one-page disclosure form called ‘distributor-investor mutual fund disclosure form’ in order to improve transparency. Distributors are expected to disclose the percentage of trail commission in this form. “At the point of sale, a one-page disclosure form that both the customer and the seller sign off on should be included. The disclosures should be in a manner that an average customer can understand what the product costs, what the benefits are and for how long the customer should hold the product,” says the Sumit Bose report.
