<p> In a circular to all mutual funds and asset management companies (AMCs) the market regulator said, “You are advised to ensure compliance with the instruction of the investor informing his desire to change his distributor and or go direct, without complleing that investor to obtain an NOC from the existing distributor.”<br /><br />Sebi said that Association of Mutual Funds of India (AMFI) in September mandated that AMCs will act on instruction of the investors if they desire to change their distributor. “It appears that this mandate is not being followed by the MF industry... some AMCs are insisting on the investor procuring a no objection certificate from the existing distribtuor for this switch over,” Sebi said. Sebi said it has come to notice that unwarranted hardship was being caused to investors in mutual fund schemes. <br /><br />The NOC clause had been introduced in the first place to curb practice of mostly high net worth investors constantly changing distributors based on pass-backs received or promised. However in 2003, Sebi prescribed a code for distributors whereby pass-backs to investors were prohibited.<br /><br />In 2007, AMFI withdrew the NOC clause and a working group recommended that when an investor indicated his desire to change distributor, the AMC should act on the instruction. It also deemed that once the distributor was changed. <br /></p>
<p> In a circular to all mutual funds and asset management companies (AMCs) the market regulator said, “You are advised to ensure compliance with the instruction of the investor informing his desire to change his distributor and or go direct, without complleing that investor to obtain an NOC from the existing distributor.”<br /><br />Sebi said that Association of Mutual Funds of India (AMFI) in September mandated that AMCs will act on instruction of the investors if they desire to change their distributor. “It appears that this mandate is not being followed by the MF industry... some AMCs are insisting on the investor procuring a no objection certificate from the existing distribtuor for this switch over,” Sebi said. Sebi said it has come to notice that unwarranted hardship was being caused to investors in mutual fund schemes. <br /><br />The NOC clause had been introduced in the first place to curb practice of mostly high net worth investors constantly changing distributors based on pass-backs received or promised. However in 2003, Sebi prescribed a code for distributors whereby pass-backs to investors were prohibited.<br /><br />In 2007, AMFI withdrew the NOC clause and a working group recommended that when an investor indicated his desire to change distributor, the AMC should act on the instruction. It also deemed that once the distributor was changed. <br /></p>