AMFI Code of Conduct for mutual fund distributors

Duty to the investor

• Investor interest is paramount. Do due diligence and use independent judgment.
• Avoid conflicts of interest, and disclose any you cannot avoid, especially with group or affiliate AMC schemes.
• A financial incentive must not drive which scheme you suggest.
• No rebating or passing back of commission, and no gifts or vouchers as an inducement.

Banned malpractices

The Code names these explicitly:

• Churning
• Splitting applications
• Payment defaults
• Diverting investor funds
• False dividend or redemption claims
• Mis-selling
• Misleading statements
• Hiding risks

Compliance and suitability

• Follow the SEBI Mutual Fund Regulations and SEBI and AMFI circulars on selling, distribution and advertising.
• Keep distribution separate from investment advice, as the SEBI Investment Advisers Regulations require. See MFD vs RIA.
• Complete KYD. Attest documents and do in-person verification for KYC carefully.
• Know the SID, SAI and KIM of the schemes you sell, and explain key features, fundamental attributes and risks.
• Collect the client's financial status, experience and objectives so you can judge suitability.
• Keep client data confidential. Do not share it with group companies for cross-marketing. Follow AMFI data sharing principles and personal data protection law.

Infrastructure and records

• Maintain adequate physical and digital infrastructure, with cyber security.
• Have internal controls to detect and prevent mis-selling and fraud. Insurance is encouraged.
• Keep client records, including KYC and correspondence on suitability, consent and dissent.

Dealing with clients

• Share full scheme information supplied by AMCs and never withhold material facts.
• Highlight risks and urge clients to read the SID, SAI and KIM.
• Disclose the commission you receive on competing schemes being considered. See commission disclosure.
• No indicative portfolio, indicative yield, or indicative or assured returns.
• If you also sell assured-return products, never present mutual funds as assured or regular income. Say clearly that principal can lose value.
• Forms carry the investor's own contact details only, never your staff's. No tampering. Your EUIN goes on the form.
• Help resolve investor grievances.

Marketing material

• Use only marketing material provided by AMCs.
• Do not create your own scheme material or use AMC logos without the AMC's written approval.
• Make comparisons only like for like, with full facts.
• For names, taglines and social media, see social media and advertising rules.

Digital platforms run by an MFD

If you run your own app or website for clients, it must:

• State clearly that the scheme is a Regular Plan that carries commission.
• Show a prominent link to commission rates across competing schemes.
• Show a prominent link to the SID, SAI and KIM.

Other obligations

• Renew NISM, ARN and EUIN on time, and make sure staff are certified.
• Train staff, including on responsible use of social media.
• Cooperate with AMCs, AMFI, SEBI and due diligence agencies.
• Inform AMCs and AMFI of changes in status, address or contact details.
• Refund commission that is subject to clawback.
• Report staff misconduct, arrests and terminations for bad acts.