Globally, Independent financial advisers Account Only for 10% : SEBI
Chairman Mr. U K Sinha
Refusing to budge on mandatory disclosure of commissions and other
agent payouts by mutual funds, regulator SEBI today (May 25, 2016) said it is
in favour of a model where investor buys these products directly without any
middle men & a new online platform for buying and selling these instruments
would be in place very soon.
The distributors and financial advisors have been lobbying hard against
mandatory disclosure of commissions by fund houses, which have also been asked
by the regulator to disclose to investors salaries and other payouts to
top management.
"We should worry more about the investors than about those doing
business of mutual fund distribution. Globally, the mutual fund is moving
towards direct buying. Anyway, Independent financial advisers (IFAs) account
for less than ten per cent of mutual fund industry's asset under
management," SEBI Chairman Mr. U K Sinha said.
He said the mutual fund space has been seeing some encouraging trends
in recent years and in just 3 years, the AUM has more than doubled to over Rs.
14 lakh crore, whilethe number of folios has crossed 4.8 crore.
Besides, the net equity inflows of MFs have gone up sharply at a time
when the FPIs exposure to the Indian market shave come down marginally.
"Mutual funds are doing very well. Over 90% of schemes have
outperformed their benchmark indices over various time periods. Now, SEBI has
enhanced the disclosure regime for greater transparency," he said.
Asked whether similar disclosure norms should be applied to other
financial instruments also including insurance products, Mr. Sinha did not give
a direct reply but said product cost is very high in India and there is no
reason why investors across all segments should not know these details about
their investments.
On capping expense ratio in some mutual fund schemes, Mr. Sinha said
SEBI was very seriously looking at it.
On whether the industry needed consolidation, Sinha said SEBI had no
role there as it should be driven by market forces but he personally felt that
India did not need 50-odd fund houses where bottom-ten hardly had any business.
"Consolidation is required, but SEBI can not do anything about it.
It has to be through market forces."
He ruled out any re look at commission disclosure norm sand said there
are more people doing transactions on e- commerce platforms in India than those
transacting in mutual funds.
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| SEBI Chairman Mr. U K Sinha |
"If people can buy on e - commerce platforms directly, why can not
they do the same about mutual funds," he said, while adding that the new
framework for providing an online plat form for mutual funds should be put in
place soon after the next meeting of Nandan Nilekani committee in this regard on
May 30, 2016.
"We will make it AADHAR-linked... We want to encourage people to
transact directly... We will also look at whether there is need for an entirely
new set of online platforms for mutual fund transactions or whether that can be
done on existing platforms," he said.
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