The ARN committee has received an in-principal approval from AMFI to hand over the compliance work to a third party audit firm
Mumbai: Mutual fund houses are likely to outsource the due diligence process related to regulation of distributors to a third party agency, according to sources privy to the development. The task of compliance may be outsourced to an audit firm or a common agency to the industry.
The AMFI board has to give a formal approval to this proposal made by the committee looking in to the implementation of the due diligence requirement.
The cost will be borne by all AMCs. Fund houses are mulling the creation of a pool of money for this purpose. The task is likely to increase the compliance cost for the fund houses.
The committee will chalk out the extent of due diligence process which will be outsourced to the audit firm after receiving a formal go ahead from the AMFI board.
SEBI, in its circular issued on August 22 had put in place detailed due diligence process for regulating distributors through AMCs.
The due diligence process will be applicable for distributors satisfying one or more of the following criteria:
- Multiple point presence (more than 20 locations)
- AUM raised over Rs 100 crore across industry in the non institutional category but including high networth individuals (HNIs)
- Commission received of over Rs 1 crore p.a. across industry
- Commission received of over Rs 50 lakh from a single AMC
