AMFI is likely to approach SEBI on the issue of disclosing distributor commissions in account statement. The decision was taken at the AMFI board meeting held today, said two people familiar with the development.
“SEBI has recommended us to disclose commission of distributors in account statements. However, we feel that this is a controversial issue which needs to be discussed in detail. We have to discuss the implications of this move on the industry. Hence, the board has decided to take up this issue with SEBI,” said a fund official who attended this meeting.
Many fund officials are against SEBI’s proposal. Sundeep Sikka, CEO, Reliance MF tweeted, “Relevant disclosures are good. Disclosing commission on a/c statement not solution but important to disclose total expense charged by MF schemes.”
Many distributors have vehemently opposed this proposal as they believe that such a disclosure will be regressive and induce pass back practice by investors.
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.
