Mutual Fund News : Revision in the Guidelines by AMFI on Transfer of AUM from One MF Distributor to Another

Publish Date:

The Association of Mutual Funds of India (AMFI) has decided to revise the existing best practice guidelines for Transfer of AUM from one MF Distributor (ARN-holder) to another, in partial modification of the aforesaid circular, based on the recommendations of AMFI’s Standing Committee on Certified Distributors (ARN Committee) and approval of the Board of AMFI.

In simple words, AMFI has clarified that, if an investor transfers their assets to the new ARN holder at a time when their Mutual Fund Distributor initiates transfer of AUM due to any reason, the new MFD will be entitled to get trail commission on the mutual fund investments of the clients transferred under its ARN.

Prior to this revision of guidelines, if investor changes their MFDs, the new MFDs were not entitled for any trail commission. Nevertheless, now as per the amendment, the above provision is applicable only in case of transfer of AUM initiated by the transferor MFD. Keep in mind that if clients change the ARN code which means, if they shift from the existing ARN to another broker on their own, then there will be no trail commission on such transactions. However, if client changes ARN due to voluntary exit of existing distributor, the new distributor is entitled to get trial commission.

In addition, there are various circumstances covered under the revision of guidelines by AMFI for Transfer of AUM like:

  • Distributor (ARN Code) change initiated by the Investor

  • Distributor (ARN Code) change initiated by the existing distributor

  • Change in Distributor / ARN code due to voluntary cessation of business by a MF distributor

  • Transfer of AUM of a deceased MF distributor to the ARN of the nominee/ legal heir of the deceased

Apart from this, all other norms related to Transfer of AUM from one Mutual Fund Distributor to another remained unchanged.