MFs may disclose individual agent commission in account statements

After capping agent commission, mutual fund industry body and front-line regulator Association of Mutual Funds in India (AMFI) may now ask the fund houses to disclose the individual distributor commission in the account statements sent to investors.

The AMFI plans to take up the issue of "disclosing distributors commission in Statement of Accounts" in its board meeting this week.

The move is aimed at making distribution commissions more transparent as part of efforts to help the investors become better-informed about the total amount being paid by their Asset Management Company (AMC) as distributor commission from their investments in MFs.

The industry also hopes that such a step will help address the issue of trust deficit about commission payouts, something which has been a matter of serious concern to the investors and the regulators lately.

Till now, the Statement of Account sent to each investor includes details about their folio number, investment amount, gains/loss, and certain KYC details.

If the new proposal gets ratified by the AMFI Board, it will force every fund house to add commission payout details - with names and amount - in every statement of account.

This follows a recent meeting convened by the capital markets regulator Sebi with the AMFI and senior industry officials -- Birla Sun Life AMC CEO A Balasubramanian and HDFC AMC Managing Director Milind Barve -- and leading transfer agents Karvy and CAMS to discuss best practice to curb heavy commission payouts in the industry and to bring in more transparency.

According to sources, AMFI in its earlier board meetings had also found favours for the proposed move from players like HDFC, Birla Sun Life and UTI Mutual Funds, who have been advocating more disclosures to bring in more transparency and accountability.

Other key issues likely to be discussed in the board meeting tomorrow is the recent Sebi letter on dividend stripping to the fund houses and the regulator's directive to mutual funds to provide transaction data about distributors and agents to Sebi.