Amfi permitted AMCs to pay path fee to distributors in case a consumer transfers his property from one distributor to a different. (Representative picture)
This change follows quite a few requests from Mutual Fund Distributors (MFDs) to evaluate the present AMFI Registration Number (ARN) switch norms.
Mutual fund distributors will now have the chance to obtain path commissions from Asset Management Companies (AMCs) for property transferred by an investor from one distributor to a different.
This change follows quite a few requests from Mutual Fund Distributors (MFDs) to evaluate the present AMFI Registration Number (ARN) switch norms.
These norms at present forestall AMCs from paying path commissions to the brand new distributor when an investor transfers their property to a brand new MFD.
In a communication to its members on Tuesday, the Association of Mutual Funds in India (Amfi) permitted AMCs to pay path fee to distributors in case a consumer transfers his property from one distributor to a different.
However, AMCs can solely pay path fee after cooling off interval of six months from the date of switch of property by traders.
“In respect of change in distributor/ ARN code initiated by the investor, the AMCs may consider making payment of trail commission to the transferee distributor after a cooling off period of six months from the change of distributor code in the unitholder database,” the trade physique stated.
Further, it stated that the cost of fee to the brand new (transferee) distributor could be primarily based on the decrease of the fee charge of the transferor and the transferee distributor.
The mutual fund physique additional clarified that other than path fee, no different funds of any type, together with incentives, might be made concerning modifications within the distributor.
The trade physique Amfi famous that the present ARN rule was launched over a decade in the past to curb sure market practices prevailing then, which can not be prevalent, and in addition because the transferee mutual fund distributor gives the identical degree of help and repair to the involved traders on the transferred property.
