The industry body has drastically increased the registration and renewal fees for mutual fund distributors across the board
With the mutual fund (MF) industry bogged down by a number of problems, the decision of the Association of Mutual Funds in India (AMFI) to hike AMFI registration number (ARN) renewal fee is likely to prevent new independent financial advisors (IFAs) from entering the market. However, the move is also expected to curb unscrupulous players from obtaining multiple ARN numbers to dodge income-tax (I-T) authorities. AMFI clearly states that no individual should hold more than one ARN card or certificate of registration.
AMFI, in its circular issued on 19 May 2010, has hiked the ARN registration and renewal fees across the board with effect from 1 June 2010.
The ARN number for corporate bodies will be valid for three years. For individuals and corporate employees, the validity period will be computed from the date of receipt of the application till the date of validity of AMFI/NISM certificate.
Obviously, this move has not gone down well with the distributors who feel that the hike is unjustified.
Some IFAs have already approached AMFI and the market regulator Securities and Exchange Board of India (SEBI) opposing the new fee structure.
According to industry sources, the move is likely to prevent firms from getting multiple ARN numbers. Sources indicate that a leading national distributor has received numerous ARN numbers under the same address.
“If a person has four firms he will apply for multiple ARN numbers under different names. Then he divides the business and to get away from I-T liability. Now it will not be viable for such players,” said a distributor who did not wish to be named.
Currently, individuals and corporate employees are required to pay Rs250 as renewal fees. AMFI has drastically increased it to Rs2,500, which is a hike of 900%. However, an individual seeking a new ARN number will now have to shell out Rs5,000 as registration fees.
For banks, non-banking financial companies (NBFCs), public limited companies and institutional distributors, the renewal fee has been raised from Rs7,500 to Rs2,50,000, a jump of a massive 3,233%. Any new player entering the market belonging to this category will have to cough up Rs5,00,000.
The renewal fees for private limited companies has now been increased from Rs3,750 to Rs25,000 while partnership firms and societies and trusts/HUFs will have to shell out Rs12,500 from the earlier Rs2,500.
“AMFI does not have any other source of revenue. IFAs will be hit by this fee hike. Some AMCs may reimburse the fee to IFAs. Earlier they (AMFI) earned money from examination fees but now it has been taken over by the National Institute of Securities Markets (NISM). So AMFI has to find new revenue sources,” said a top official from a leading fund house.
Individuals who pass the AMFI examination are required to register with the entity in order to garner business.
“I don’t understand the rationale behind it.The cost of doing business is going up,” said Vivek Rege, CFP, VR Wealth Advisors Pvt Ltd.
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Recently, I have received e-mail & letters from fund houses stating that if ARN is renewed after 6 months then all the upfront / trail commission accrued upto 31.12.11 shall be forfeited.
The clarification has come on 31.12.11 and has been made effective from 01.01.12 i.e immediate next date. This is a bit harsh, the intermediaries whose ARN have expired should have been given time after this clarification of the consequences of non-renewal. The time is required as even if some one has given renewal exams in December first week, he would receive his exam passing certificate (mandatory for ARN renewal form processing) be end of December. After giving documents to CAMS for ARN renewal they take 20 days.
So, considering the time taken for different agencies, I request you to kindly take up the matter with SEBI and grant time till 31.03.12 for ARN holders to get the exam passed and apply for Renewal.
In this descending business, this would surely provide lifeline to small ARN holders like us.
THIS IS INDIA AND WE ARE FADE OF TO HEAR THIS KIND OF STUPID REASON
I appeal to the IFAs to contact to their respective AMCs that we would rather stop selling any more mutual funds if we are continued being strangled like this. Why would an IFA not surrender his ARN and start selling ULIPs and Insurance products where the fees is much lower and commission is much higher.
On one hand the IFAs are expected to keep client's interest in mind and on the other, his income is being squeezed everyday. If the industry has to grow, then this step has to be taken back by all means.
SEBI, are you listening ??
Mr. Vaidyanathan, please tell AMFI to bugger off from this domain. They can wind down peacefully.
I would like to request to the AMFI to visit the and check the Reg. fees of Advocate, C.A. , Doctor, Architect, Engineer, Real Estate Agent and other such professionals and then ask for the fees.
All the IFA's should come under one roof and needs to be shout before other wise one day they will throw us on the road. Friends, for waht are you waiting!!!!!!!!
This is the main priority and motive of goverment destroy the MF industry and financial sectors.
ARVIND THAKUR
ARN-49611
9817040604
SUNDER NAGAR, H. P.