Market regulator, Securities and Exchange Board of India (SEBI) has asked the mutual fund houses to pay the commission which they have been holding in the next three months, starting from February 21.
“Our commissions were held back due to certain reasons. SEBI has given time to AMCs to pay our withheld commission within three months, that is, from February 21, 2019-May 21,2019,” a Mumbai based distributor as quoted saying by a news website. This is because many distributors’s payment are withheld by Asset management companies (AMC).
According to various distributors AMC’s had withheld payment, including payment for upfront commission for sales recorded before October 22, 2018 due to factors like delay in claw back, pending of ARN (AMFI Registered Number) renewals and incomplete KYC of folios.
Earlier on 22 October, market regulator asked the AMC’s to adopt a full trail model of commission in all schemes, and stop paying upfront commissions to distributors. To this, Mutual fund lobby, Association of Mutual Funds in India (AMFI) requested regulator to clarify and exempt some of its members from the provisions.
Replying on this to association, regulator on February 21 ordered the fund houses for the release of withheld commission that took place before October 22 in the next three months. Fund houses have withheld the commission due to various reasons like failed transactions and incomplete KYC.