press trust of india, Mumbai, June 30: Capital markets watchdog Sebi Tuesday came down heavily on mutual fund players over higher agency commissions they charge from customers, warning that if they don’t behave, nothing stops it from taking punitive and corrective actions.
Noting that the domestic mutual fund distributors get one of the highest upfront fees in the world, Sebi chairman U K Sinha Tuesday asked the industry to keep such fees within “manageable limits” and behave in a self-disciplined manner lest they attract regulatory action.
Stating that the Securities and Exchange Board does not like to get into capping distributors’ commission, he, however, said Sebi expects the industry body Amfi to introduce self-discipline for the industry, failing which there would be corrective action.
To buttress his point, Sinha reeled out numbers and said between FY14 and FY15, the revenue from MF distribution just doubled from Rs2,500cr in 2013-14 and crossed Rs5,000cr in 2014-15, while the industry growth has been not so robust.
“Sebi would not like to get into this area (commissions) at this stage,” Sinha told reporters here on the sidelines of a CII-organised Mutual Fund Summit. “We would like to believe that Amfi in their wisdom will be able to introduce some amount of self discipline. However, if we find that this is not going to be the case, nothing stops Sebi from taking action,” Sinha warned.
Sebi has time and again voiced its concerns over higher fees being doled out to mutual fund agents.