IFA Association shoots off letter to AMCs asking their stance on SEBI’s commission disclosure diktat

Big IFA's are login big amounts they are not at all interested in Fighting Back with SEBI. No association is united. No body is observing No-Login Day.. So nothing will happen.

Only few years back direct plan has been introduced into the MF industry, Before that or now also industry AUM has been collected by distributors. From collected AUM Every concern people has been paid as various way.including CEO OF MF INDUSTRY TO ALL SUPPORTING,SERVICE STAFF.INCLUDING THIRD PARTY SERVICE AGENT also. than why only distributors renemuration will be disclosed.WHY NOT OTHERS PAYMENT.

Dear Sir,

The new sebi circular regarding disclosure of commission is ill-considered, ill-conceived and ill-advised also as this move of sebi is turning Mutual Funds Investors' account statement for pitching Direct Plans by not only disclosing commission paid to the Distributor but the account statement also mention that the expense ratio of both Regular and Direct plans of the schemes that the investor has invested in.

The statement will effectively say to the customers, "Look here, your Distributor is taking away this much commission from your money". If you invest in Direct Plan of the same fund, then you will make extra money. This is a pretty good case that SEBI wants investors to abandon Distributor and switch to Direct Plan.

We all know that while Direct Plans have higher returns( as AMC has not to pay any commission to distributor), but they are a viable means of investment only for knowledgeable, financially literate and experienced investors.

Now , the question arises, "How many of us (We Indians) are financially literate, knowledgeable and experienced about to invest in EQUITY directly ?" If SEBI thinks that financial literacy has gone up in India and we Indians understand well risk- reward ratio of financial products and are competent enough to go for equity directly of their own, then what is the need of Mutual Fund AMCs as such, as they are paying a hefty packages (in lacs & crores) to their CEOs, CIOs, Fund Managers and Research Analysts etc. out of investors' money through expense ratio ? Let them invest directly and dissolve all the AMCs.

Direct Plans cannot lead to an expansion of the mutual fund industry, which requires the sale push that DISTRIBUTORS provides. SEBI's new push for Direct Plans will create a situation whereby Distributors bring in new customers but as soon as customers turn profitable, they switch to Direct Plans.

So, all in all, these changes were have a negative impact in the expansion of Mutual Funds industry where financial literacy is at its lowest ebb. And if, these changes implemented, we all fund Distributors fraternity strongly believe that this will be the first step, by the mutual fund industry, of digging its own graveyard.

Our fight is also with AMCs as they call us --- Channel Partners, Business Partners, Business Associates and likewise. But they all fail to put forth our concerns or more appropriately mutual fund industry's interests before SEBI/ AMFI effectively. Surely, they have not done their duty properly and that's why we are in a state of shock !!!

AMCs argument that we (Distributors) should fight the case with SEBI directly here,
carry no weight as we are registered with AMFI and empanelled with AMCs and AMCs will have to understand that Distributors and AMCs are the two wheels of the same vehicle and without one, the other cannot run long .

Dear Sir

It is to bring to your notice about ridiculous, maligned and one sided circular being issued by market regulator SEBI to disclose mutual fund distributor’s commission in client statements going forward.

Currently, mutual fund distributors are already giving an annual disclosure to AMFI which states that we are disclosing commissions to investors. Also, AMCs disclose the commissions paid to the top 400 distributors on their websites. AMFI also publishes the aggregate commissions earned by these distributors across all AMCs.

Despite AMFI’s (industry and AMC body) plea to not go ahead with commission disclosure rule in account statements, SEBI has instructed AMCs to disclose commissions in half-yearly account statements.

The following points have come up for notice and review after this circular being passed:

1) Has SEBI received complaints from customers in regard of non-disclosure of commissions by distributors? If not, why the need for senseless circulars? And if yes, then why not punish the culprits rather than destroy the whole IFA community.

2) Giving too much information to investors will only confuse them and resist them to take up services of MF distributors wherein they are guided and educated by our community to invest in mutual funds, provide consultancy services of picking up right funds depending on clients investment portfolio, past experience, income profile, life stage, risk profile, investment horizon, doing portfolio review and rebalancing, guiding the client in difficult times etc. Does SEBI think that such services are free in nature and IFA as a community should not be there in the first place? Let them reply in plain terms if distributors are required or not in the industry.

3) The move will be inducing pass back culture which only established distributors and big banks can afford. No more new distributors to join the industry. What happened to the idea of Skill India? What happened to idea of self sustainable employment generation for educated youth in India? Are we happy with less than 10000 active distributors in a country of more than 125 crore people? How does SEBI encourage new and professionally educated persons to join the industry?

4) Why doesn’t SEBI make it mandatory to disclose commissions across products like structured products, PMS (upto 4-6%), private equity (up to 4-6%), insurance plans (up to 50%) and NCDs (up to 6%) to disclose their commissions? Only mutual funds have been wealth creators among these ridiculously expensive products. All other products have proven to be wealth destructors. Why the regulators are biased against the Mutual Funds distributors only. Also, all industry depends on commissions to selling agents, even a bottle of shampoo sold in India, commissions are paid to distributors and retailers. Do they disclose their commissions in the bill provided to clients. Then why on mutual fund commissions? Smells of rat.


5) There is already a provision of Direct Mutual Funds Plans in all categories for educated and well heeled investors who have high financial literacy and do not wish to take services of a distributor. Also, distributor’s income and commissions are capped through various provisions including maximum expense ratio of fund, capping on upfront commission etc. Then what is the purpose of such a disclosure to investors who have been educated and served over the years by distributors. Does the regulator considers distributors to be only taking up the service of educating and bringing new clients to the industry only to be grabbed up by direct plans lure in future. How does the regulator ensure continued income to distributors for their efforts to educate and bring the clients to the mutual fund industry?

6) The angle of corruption in SEBI board and officials is to be also checked. Its highly likely that the SEBI board, officials and chairman are bribed by big banks and AMC’s who want to get rid of the distributors which are their direct competition. That way they will start enjoying monopoly in mutual fund distribution. All at the expense of the investors and distributor community. Assets and liabilities of all SEBI officials, board members and chairman should be scrutinized by IB and concerned authorities.

SEBI as an industry regulator is acting with malaise and partiality against the distributor community on the behest of the large corporate distributors and banks.

We request you sir to look into the issue seriously and have all angles of SEBI circular being checked. We demand that this SEBI circular on commission disclosure be rolled back asap and no one should be allowed to destroy a budding industry and take away hard earned income of hard working people of India and also not to create disruptions in the market place in the name of investor protection.



I have written the above letter to the Prime Minister and President of India online grievance mechanism. All IFA can copy / change language as they deem fit and proper and write to the PM and President.
10 mins task. Pls do not hesitate. Let 1000 compliants reach the office of the PM and President and they force SEBI to withdraw this circular.
pgportal.gov.in- PM portal
helpline.rb.nic.in - presidents office helpline

If 1000 messages are received, government will be forced to listen to us.

SEBI MAY ABOLISH MF INDUSTRY SOON.SEBI NOT FAVOUR TO INVESTORS AND IFA"S .IT MAY SUPPORT TRADING,FUTURE MARKET AND OPTIONS.THIS IS THE CLEAR WAY TO VANISH INVESTORS
MONEY.