Sounding a warning bell to the mutual fund industry, Securities and Exchange Board of India (Sebi) chairman U K Sinha said that the mutual fund industry should look at revising the commission paid to distributors to avoid controversies.
“The commission paid to distributors in India is one of the highest in the world. World over cost and fees are going to be important point in any debate. It has to be kept within manageable limits so that no eyebrows are raised,” UK Sinha said while speaking at the CII Mutual Fund Summit.
If the MF industry did not demonstrate self discipline when it came to distributor commissions, nothing stops Sebi from stepping in, Sinha added. Between FY14 and FY15, the revenue from MF distribution doubled from Rs 2,500 crore in 2013-14 and to over Rs 5,000 crore in 2014-15 despite a not so great growth for the mutual fund industry as a whole.
According to Sinha, a market with distribution along with advisory is going to be short lived in the country. “Sebi cannot allow distributors to advise. This is not done. I have asked my team to look into cases of distributors who continue to advise clients,” Sinha said.
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