New 'Code of Conduct' for agents and distributors of Mutual Funds

SEBI vide Circular SEBI/IMD/CIR No. 8/174648/2009 dated August 27, 2009 has come out with a new Code of Conduct for Intermediaries of Mutual Funds. Earlier in June, 2002, SEBI vide MFD/CIR/ 06/210/2002 dated June 26, 2002 had issued a Code of Conduct for Intermediaries of Mutual Funds. Taking into account the new regulatory developments (like ban on entry load) AMFI has revised the existing code for intermediaries (agents and distributors) and has come out with the new Code. SEBI states that if any intermediary does not comply with the code of conduct, the mutual fund should report it to AMFI and SEBI. It also states that mutual funds should not deal with those intermediaries who do not follow code of conduct. 

The additional obligations on intermediaries as per the new Code are the following: -

• Intermediaries should be fully conversant with the key provisions of the Scheme Information Document (SID), Statement of Additional Information (SAI) and Key Information Memorandum (KIM) as well as the operational requirements of various schemes.
• Intermediaries should disclose to the investors all material information including all the commissions (in the form of trail or any other mode) received for the different competing schemes of various Mutual Funds from amongst which the scheme is being recommended to the investors.
  

A copy of the Circular is available here.
A copy of the old Code is available here.