Some distributor associations have protested against a recent circular by Securities and Exchange Board of India (Sebi) that asked mutual funds to disclose distributor commissions in investor’s account statements. Kanpur-based Association of Mutual Fund Financial Advisory (AMFFA) have imposed a ‘no log-in day’ beginning 4 April.
They have stopped accepting mutual fund (MF) applications for purchase of units or switching. “We have not yet decided till when this will go on. But we will have a meeting this Friday to decide on the future course of action,” said Alok Khanna, a senior member of AMFFA.
In nearby Varanasi, on 2 April, the Mutual Fund Distributors’ Association–Varanasi (MFDAV), which has about 86 members, submitted a letter of protest to the Jansampark Karyalaya in the city, which is linked to the Prime Minister’s Office (PMO). “We met Mahesh Sharma (Minister of State, independent charge, Ministry of Tourism) and submitted a letter to him on why we think Sebi’s move has been unjust. We also requested him to set up a meeting with Jayant Sinha (Minister of State for Finance),” said Rajiv Shah, secretary, MFDAV.
Shah said that distributors associated with MFDAV have decided to not conduct any business for a few days as a mark of protest. “We are not stopping any investor from going to the MF offices directly and depositing their cheques there, but we are not soliciting any clients, currently,” he said.
On 18 March, Sebi had issued a circular that mandated additional disclosures in an investor’s common account statement (CAS). It said that, on a half-yearly basis, MFs must disclose distributor’s commission for the preceding half-yearly period in the CAS. MFs have also been told to give the scheme’s expense ratio under the direct and regular plan. Additionally, MFs will also now need to disclose the salaries of executives who earn Rs.60 lakh or more a year, on their websites.
