The regulator has clarified that upfront commission to distributors shall continue to be paid by the investor directly to the distributor by a separate cheque
Mumbai: SEBI has allowed mutual funds to charge a transaction fee of Rs 100 on investments of Rs 10,000 and above for existing investors through a circular issued today. For roping in new investors, advisors will be entitled to Rs 150 on a subscription of Rs 10,000 and above.
AMCs will be required to deduct any charges from the subscription amount and pay the transaction charge to distributors later. There will be no charges in direct investments.
The statement of account given to investors will reflect gross investment, transaction fees deduction and the net investment. Distributors can continue to get an upfront fee through a second cheque directly from their investors.
Distributors will not be allowed to levy any transaction charges other than purchases/ subscriptions relating to new inflows. These transactional charge details will have to be printed in bold letters in application forms.
“Distributors will be able to choose to opt out of charging the transaction charge. However, the ‘opt-out’ shall be at distributor level and not investor level i.e. a distributor shall not charge one investor and choose not to charge another investor,” states the circular.
SEBI has put the onus on checking any malpractices by distributors in implementing this rule. It has asked fund houses to put in place systems to check if distributors are splitting applications in multiple funds to earn higher transaction fees. AMCs and AMFI have been authorized to take strict action against such practices.
The regulator has asked fund houses to de-duplicate folios within a period of six months.
