AsiaNet-Pakistan Premier Editorial Content and Press Release Distribution Service
Islamabad, July 20, 2016 (PPI-OT):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.
In order to protect small investors, the SECP has already reduced the maximum upfront commission from 5 to 3%. 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, Mr. Zafar Hijazi, emphasized that “it is unfair that large investors are exempted from any upfront commission whereas small investors have to pay it.”
Chairman Hijazi 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 of Pakistan has granted a number of highly significant tax benefits to investors in mutual funds and pension funds. The Government’s objective is to encourage savings and investment among Pakistanis’ through the capital market to make the country’s economy grow. In this regard, 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.
Despite its profitability, the mutual fund industry has been reluctant to commit resources to increase the number of retail investors by expanding branch network and sales teams, and the burden is on the industry to prove that it is seriously implementing measures to reach out to retail investors.
For more information, contact:
Shakil Ahmad Chaudhary
Head, Internal and External Communication
Securities and Exchange Commission of Pakistan (SECP)
NIC Building, 63 Jinnah Avenue, Islamabad
Tel: +92-51-9214005 or +92-51-9214009 (Ext. 378)
Fax: +92-51-9206459
Cell: +92-302-8552254
E-mail: shakil.chaudhary@secp.gov.pk
Website: www.secp.gov.pk