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Collective Campaign

Distributors and financial advisors have created an entity to safeguard their interests

After having suffered, they say, at the hands of the Securities and Exchange Board of India (SEBI) directive that introduced the no-load regime in the mutual fund industry, and having to face a host of other such rule changes that have sought to create a more investor-friendly space therein, the over three million financial advisors and distributors in India have decided to band together to present a united front against all such activities that hurt their incomes.

An aim of the body would be to ensure the agents' community was not caught by surprise by SEBI orders in the future, the way that they were in this instance, with neither SEBI nor the Association of Mutual Funds in India (AMFI) keeping them in the know too much. It would also come in handy as a pressure-creating lobby to push their collective interests.

The entity is to be called the Financial Intermediaries Association of India (FIAI), and has been slated to remain a non-profit set-up. It has been created under the Companies act. "The main aim of the organisation is not to be a trade union, but a trade association representing distributors and financial advisers, Business Standard quoted Rajiv Bajaj, managing director, Bajaj Capital, a financial services distributor as saying.

The business that they are looking to protect is worth at least Rs 3,000 crore. SEBI's ban on entry loads order had shaved as much as a third of that amount.

Those involved in the setting up of the body are saying that this is not a knee-jerk response to the SEBI order, but that they have been working on setting it up for the last three years.

However, the move to set up the body comes from leading  distribution houses in the industry. In the several meetings that have been held already, saw the biggies mark their presence like ICICI Bank, HDFC Bank, Citibank, BNP Paribas, Religare Securities and Karvy.

The first year's target is to enroll some 5,000 members that would comprise most of the top distributors and financial advisers.