AMFI has recommended SEBI to disclose the total TER in account statements, said C. VR. Rajendran, CEO, AMFI at the Cafemutual IFA Event 2016 held in Mumbai recently. He was responding to a question posed by a distributor on the status of disclosing distributor commission in account statement.
However, the final decision would be taken by the SEBI board.
Rajendran said that AMFI is trying to convince SEBI on disclosing total TER and not to include commission of distributors in the account statement. “SEBI wants to improve disclosure standards in the mutual fund industry and disclosure of commission in the account statement is the part of this initiative. Such disclosures are already introduced in Canada and Australia. However, our market is not mature enough for this yet and the proposed disclosure may induce pass back practices. We have shared our feedback with SEBI and it (SEBI) seems to be convinced.”
Rajendran further clarified that one of the proposals to show break up of TER in the account statement may not serve any purpose as it may confuse investors.
He said that AMFI has asked SEBI to put such disclosure in percentage terms. “Ultimately, investors would like to know how much they are paying for the services and that can be disclosed through total TER,” said Rajendran.
Ever since SEBI asked AMFI to disclose the commission of distributors in account statement, many distributors have vehemently opposed this proposal as they believe that such a disclosure will be regressive and induce pass back practice by investors.
