AMFI has issued best practices guidelines in which it has allowed AMCs to pay trail commission to MFDs if a client transfers his assets from one MFD to another.
However, AMCs can only pay trail commission after cooling off period of six months from the date of transfer of assets by investors.
This has come after AMFI received requests from many MFDs to review the existing ARN transfer norms which do not permit AMCs to pay trail commission to the new distributor if an investor initiates transfer of his assets to the new MFD.
AMFI said, “Considering that the above rule was introduced over decade ago to curb certain market practices prevailing then, which may no longer be prevalent, and also since the transferee MFD provides the same level of support and service to the concerned investors on the transferred assets.”
Further, AMFI clarified that if an investor transfers his assets back to the first distributor within cooling period, another cooling off period of six months will be applicable for the payment of trail commission.
