Mumbai: Equity market regulator Sebi has criticised the high commissions charged by mutual fund distributors and asked the industry to keep such fees within “manageable limits” or else face punitive actions. While addressing a mutual fund summit organised by CII, U.K. Sinha, chairman said that the commission paid to distributors in India is one of the highest in the world and asked the industry to demonstrate some self-discipline while charging fees from customers.
There are three jurisdictions where upfront commissions are not allowed and there are three others where trail commissions are not allowed. Mr Sinha observed that distributor commissions paid out had doubled from Rs 2,500 crore in FY14 to Rs 5,000 crore in FY15.
“Sebi would not like to get into this area (commissions) at this stage. We would like to believe that AMFI in their wisdom would be able to introduce some amount of self-discipline. However, if we find that this is not going to be the case, nothing stops Sebi from taking action,” he warned.
Stating that the issue of higher commission is a matter of serious concern, the Sebi chairman said, “Not only Sebi, but the whole government is worried about this and we have already set up a high powered committee to look into the type of cost and fees that are being charged to MF investors. So this is not an issue which an AMCs can wish away”.
Mutual Fund industry face ire on misuse of funds
Sebi chairman U.K. Sinha on Tuesday warned the mutual fund industry against the alleged misuse of the investor education funds and said that the regulator would be forced to step in if the industry fails to implement investor education seriously.
Mr Sinha said that the onsite visits conducted by Sebi officials in 18 locations organised by 22 AMCs, found that only 18 per cent of the venues had genuine investors.
“In 65 per cent of the cases, there was no surety that the programme would be held and they were either advanced or cancelled,” the chairman said.
