COMPLIANCES APPLICABLE IN RELATION TO OFFERING OF MUTUAL FUNDS
A. Compliances under the Code of Conduct for MFDs
1.1 The following disclosures are to be provided by MFDs offering Mutual Funds to investors:
(a) If MFDs are engaged in the distribution of Mutual Fund products of their group / affiliate / associate entities, it shall make appropriate disclosures to the investors regarding the conflict of interest arising from distribution of such Mutual Fund scheme. Further, if the MFD is an associate / group company / sponsor of AMC of a mutual fund, the MFD shall, while providing suggestions to investor, disclose all material information about its association with the concerned AMC and the total amount of commission received/receivable.
(b) MFDs are required to provide and full and updated information on Mutual Fund schemes, as provided to them by AMCs, to the investors including Statement of Additional Information (SAI), Scheme Information Document (SID), addendums, performance reports, fact sheets, portfolio disclosures and brochures. MFDs shall not deliberately withhold or omit any material fact or information supplied to them by the AMCs from any investor that the investor should know or may want to know.
(c) MFDs shall disclose to the investors all material information including all commissions (in the form of trail commission or any other mode) received or receivable by them for the different competing schemes of various Mutual Funds from amongst which the scheme is being recommended to the investor.
(d) MFDs shall disclose to their clients the list of mutual funds they are affiliated with and inform to the clients that the information provided is limited to the mutual fund products that are being distributed/promoted by the MFDs and inform the clients that the clients may also consider other alternate products, which are not being offered by the MFDs before making investment decision.
(e) MFDs shall ensure that on any digital platform provided by MFD for offering investment facility to investor, it is categorically disclosed that the scheme the investor is subscribing to is of Regular Plan which involves payment of commission to MFD. The link for the rate of commission received or receivable by the MFD for the different competing schemes of various Mutual Funds shall be prominently displayed on the platform indicating the same as a hyperlink. Further, a link to the scheme offer documents (SID/SAI/KIM) shall also be prominently displayed on the concerned page.
B. Compliances under the EOP Guidelines
2.1 Disclosures by an EOP
The platform offering Mutual Funds shall provide an interactive tool for the investors to screen or filter various schemes based on the criteria selected by the investor including past performance, AUM, etc. and ensure that there is no auto display of recommendation or ranking of any of the schemes. The aforesaid tool shall not itself provide any research reports or opinions or perform any research based or investment advisory activity.
Further, the platform shall display in a user-friendly manner, the factual information pertaining to Mutual Funds as available on public domain including past performance of Mutual Fund schemes. It shall be ensured that the following disclosures are provided on the platform:
I. Name of the Mutual Fund. Link to Mutual Fund website whose products are offered.
II. Name of the scheme of the Mutual Fund. Type and category of the scheme of Mutual Fund.
III. Name of the Fund Manager.
IV. Investment objective of the scheme.
V. Scheme performance along with source.
VI. Scheme details such as minimum investment, AUM, NAV, Exit Load, Expense Ratio.
VII. Risk-o-Meter of the scheme and Potential Risk Matrix, wherever applicable.
The platform shall also display the grievance redressal mechanism available for the investors including the manner in which a complaint can be lodged by an investor.
Advertisement Code for EOPs
(a) Advertisement shall include all forms of communications issued by or on behalf of the platform in any publicly available media that may influence investment/sale decisions of any investor/prospective investors, or decision of investor to avail services of the EOP including digital media, print media, television, radio, out-of-Home, cinema theatres etc.
(b) The platform shall display the following:
I. Relevant information regarding the entity providing the platform, which is accurate, true, fair, clear, complete, unambiguous and concise.
II. Name of the entity providing the platform, registered office address, official website, email address, helpline number, and AMFI Registration number.
III. Standard warning in legible fonts (minimum font size 10) stating that 'Mutual Fund Investment are subject to market risks, read all the related documents carefully before investing.' No addition or deletion of words shall be made to the standard warning.
(c) The advertisements shall not contain / use:
I. Anything which is otherwise prohibited from being published under any legislation or regulations.
II. Statements which are unwarranted, or exaggerated, or false, or misleading, or biased or deceptive, or based on assumptions/projections.
III. Statements which directly or by implication or by omission may mislead the investor.
IV. Any customer testimonials and/or any celebrity endorsements.
V. Any statement which is likely to be misunderstood/ mis-interpreted or likely to mislead or disguise the actual intended message.
VI. Any statement designed to exploit the lack of knowledge of un-informed or inexperienced investors.
VII. Any slogan or tagline which is exaggerated or unwarranted or inconsistent with or unrelated to the platform.
VIII. Any indicative returns or promise or guarantee of assured return to the general investors.
IX. Any statement which directly or indirectly discredits other platforms or make unfair comparisons.
X. Any representations about the performance or activities of the platform unless accompanied by factual / verifiable data, disclosures of all the risk factors, etc. and disclaimer that "Such representations are not indicative of future results". Such disclaimer shall be in the same font as the rest of the advertisement.
XI. Any superlative terms, such as “The Best”, “No. 1”, “Market leader”, etc.
XII. Any celebrities in any advertisements regarding its platform services.
Compliance and other requirements
(a) Statistical information, charts, graphs, etc. whenever used, should invariably mention their source.
(b) Where advertising claims are expressly stated to be based on or supported by independent research or assessment, the source and date thereof should be mentioned in the advertisement.
(c) The platform shall not involve/engage in games/leagues/schemes/campaigns/competitions etc. which may involve distribution of prize monies/medals/gifts, etc.
C. Compliances under the IA Master Circular
Disclosures by IAs providing distribution / execution services
3.1 IAs are required to disclose the following information on their platforms:
(a) Full name, type of registration, registration number, validity, complete address with telephone number.
(b) Investor Charter as provided under Annexure E of the IA Master Circular.
(c) Details of investor complaints.
(d) Link / option to lodge a complaint with them. Additionally, link to the SCORES platform of SEBI may also be provided.
3.2 In the event IAs are offering mutual funds as part of their distribution services in the capacity of an MFD, the requirements as provided in Paragraph A of Annexure E shall apply.
3.3 Further, while there are no specific disclosure requirements applicable to an IA offering mutual funds to clients, it is recommended that the platform offered by the IA adopts similar disclosure requirements as detailed for EOPs in Paragraph B of Annexure G.
D. Compliances under the MF Regulations and MF Master Circular
4.1 In the event mutual funds are directly provided through the AMC, it is recommended that similar disclosures as are applicable to EOPs (highlighted in Paragraph B of Annexure G) are provided. Further, a link to the website of the respective AMCs detailing other statutory disclosure may also be provided thereby ensuring compliance with the disclosure requirements provided under the MF Regulations and MF Master Circular.
4.2 In relation to the advertisements provided by AMCs, it must be ensure that such advertisements inter alia comply with the guidelines provided in Sixth Schedule of the MF Regulations.