SECP Urges MUFAP To Curb Misselling, Expand Investor Base
Umer Jamshaid 5 years ago Wed 20th July 2016 | 07:29 PM
ISLAMABAD,(UrduPoint / Pakistan Point News - 20th july, 2016) : The Securities and Exchange Commission of Pakistan (SECP) has urged the Mutual Funds Association of Pakistan (MUFAP) to ensure that retail investors are not charged any upfront commission on investments in mutual funds unless these investors have first been fully informed about this commission.
A statement issued by the SECP here Wednesday said that in order to protect small investors, the SECP has already reduced the maximum upfront commission from 5 to 3 percent. The SECP has also barred the industry from charging those investors who make the investment online or directly visit the sales offices. Now the upfront commission is mainly chargeable where the sales staff of an asset management company (AMC) approaches an investor through its own direct effort. In a meeting with the representatives of the MUFAP, the SECP chairman, Zafar Hijazi, emphasized that "it is unfair that large investors are exempted from any upfront commission whereas small investors have to pay it". The chairman pointed out that charging of upfront commission without properly informing investors is an ethical challenge facing the mutual fund industry.
He said that the industry must put its house in order to attract small investors. The SECP will conduct a study on the sales practices of the mutual fund industry, and will take strict action against any AMC whose sales team is found to be misselling. The Government has granted a number of highly significant tax benefits to investors in mutual funds and pension funds, he added.
Other objective of the government was to encourage savings and investment among Pakistanis' through the capital market to make the country's economy grow, he added. In this regard, he said the mutual fund industry is expected to play its due role in promoting a culture of savings and investment.
The SECP team expressed its disappointment that the growth in the retail investors in mutual funds is well below expectation. The gross number of investment accounts managed by all the AMCs is only around 250,000, and some of them do not have even 500 accounts, he added.