Market regulator Sebi has asked fund houses to publicly display the commission they pay distributors for selling mutual funds, a move aimed at bringing in transparency in fee structure. The regulator has asked asset management companies to disclose commission paid to distributors between April 1, 2010 and March 31, 2011, on or before November 10, according to a circular issued to fund houses.

The information has to be published on the portal of the industry body Association of Mutual Funds in India and on websites of respective fund houses, Amfi sources said. Also, the circular has made special reference to 529 large distributors, who collect more than a crore of rupees as commission per annum. Industry sources said these distributors will be scrutinised more closely by the regulator as they handle large business volumes.

The move is already drawing flak from the distributor community, which is battling a fall in investor turnout and low distributor commissions. While large-sized distributors are sulking at the move, independent financial advisors are terrified at the thought of disclosing their income. "It'll be like exhibiting our salary account for the world to see," said a Mumbai-based independent financial advisor, who did not want to be named.

Industry experts said independent financial advisors, who have small operational set-ups, could be badly hit by the move. "I am not against transparency in fund industry, I am also fine disclosing commissions that I receive from fund houses. The problem lies in displaying it for the world to see," said Gaurav Mashruwala, a Mumbai-based independent financial advisor.

"It is principally not right to disclose one's earnings on public websites. Such a move is not going to help investors in any manner," he said. Fund commissions have fallen significantly after ban on entry load in August 2009. Distributors earn 0.75-1.50% as upfront commission and 0.5-0.75% as annual trail fees while selling equity funds.

"We're just recovering from the load ban...The move to display commission rates will only worsen our case," a Mumbai-based fund distributor said. (Economic Times)