Expense Account, Mint
Sometimes a committee leaks a proposal it is considering to test reaction in stories and comments. Or sometimes it is a dissenter to what is being discussed who will leak a proposal or a decision to get public opinion against what is being proposed. Either of the two must have happened last week when we read that a Securities and Exchange Board of India (Sebi) committee examining a new compensation structure for mutual fund distributors is close to recommending a Rs 100 transaction fee on the sale of a mutual fund product. The quick push back from both distributors and consumer activists shows that both are unhappy. The distributors say that a flat fee of Rs 100 does not even cover the cost of transport and is neither here nor there. The consumer voices say that a flat fee is inherently unfair, translating to a 10% cost for a Rs 1,000 investor and a 0.1% cost for a Rs 1 lakh investor. They fear that this fee is an attempt to get entry loads in through the back door. It may begin as Rs 100 today, but what will prevent it from becoming Rs 1,000 tomorrow? Or coming back to a percentage in another year’s time?