SUMMARY OF THE ISSUES DISCUSSED AND SUGGESTIONS MADE BY THE REPRESENTATIVES OF FIFA AT THE MEETING WITH MR. PRASHANT SARAN , WHOLE TIME DIRECTOR, SEBI ON 3.5.2012


The main agenda was to discuss the issues, constraints and suggestions regarding distribution of Mutual Fund products in India. Mr. Saran invited suggestions to overcome the issues facing the industry.
The issues discussed and suggestions made have been segregated under four main heads as given below.

REMUNERATION

The following options were suggested with regard to the manner in which distributor remuneration can be enhanced.

  1. Re-introduce Entry Load.
  2. Introduce Variable Load and let the investor have the discretion to fill up the percentile basis points that should be charged to his investment in order to enable payment of upfront commission to the distributor. This should be followed up with the disclosure in the account statement for the purpose of transparency and to avoid any mal practices.
  3. An amount be paid to the distributor as upfront commission as before (could be a different percentage). In case of exit before a year (the current exit load period being one year), the upfront commission paid to the distributor may be recovered in proportion to the period for which the investor remained invested to the exit load period. This would go a long way in eliminating the need of a distributor to churn the portfolio.
  4. Increase in flat transaction fee may not be the solution. The remuneration should be based on percentage basis.

PROCESSESS and PRODUCTS

REGULATIONS

OTHERS