SEBI
has taken the first step in regulating distributors of mutual funds
Mumbai:
SEBI has announced that it will regulate ‘big’ distributors meeting certain
criteria. These distributors would be regulated through AMCs.
Any distributor satisfying any one or more of the following four criteria is defined as a ‘big distributor’ according to SEBI.
1. Multiple point presence in more than 20 locations.
2. AUM above Rs.100 crore across industry in the non institutional category but including high net worth individuals.
3. Receiving a commission over Rs. 1 crore p.a. across industry.
4. Receiving a commission of over Rs. 50 lakh from a single
mutual fund.
AMCs will
have to disclose the commissions paid to these distributors and AMFI will
disclose the aggregate amount of commission paid to these distributors.
According
to industry experts, this move by SEBI is for curbing mis selling. “If it is
for curbing mis selling, then I fell mis selling takes place at all levels,”
says Hemant Rustagi, CEO Wiseinvestment Advisors.
Others
agree with the move. “They should be regulated. They should disclose the
profile of the customers and their documentation,” said Sumeet Vaid, CEO,
Freedom Wealth Solutions.
However, in the absence of details on how the AMCs would regulate these distributors, there were many questions about how this is supposed to work:
· Would banks be included? If so, how would an AMC regulate these banks?
· Would all AMCs regulate all their distributors?
· How would an AMC hold a distributor accountable for mis selling or other violation?
· There is a broader issue of conflict of interest – can AMCs really regulate their channel partners on whom they are dependent for their own business?
Is it practical for AMCs to regulate big distributor? Do let us know.
