What must your mutual fund distributor do for you?
Key facts
- A distributor must act with due diligence in your interest and highlight the risk factors of any scheme (Code 4(b)).
- A distributor must disclose the commission it earns across the different competing schemes (Code 4(e)).
- A distributor must not rebate or pass back commission, in cash or in kind, to win your business (Code 1(d)).
- A distributor must not sell using assured, guaranteed or indicative returns (Code 4(g)).
The Code, read from your side
The AMFI Code of Conduct is written as a set of duties on the distributor. Flip it around and it becomes a list of things you can expect. Here are the ones that matter most day to day.
Act in your interest, and show the risk
A distributor must act with due diligence and in your interest, and must highlight the risk factors of any scheme rather than gloss over them (Code 4(b)). "Read all scheme related documents carefully" is not a formality; a distributor is required to urge it.
Disclose the commission
A distributor must disclose the commission it earns across the different competing schemes (Code 4(e)). That is what lets you see the conflict between what pays the distributor and what suits you. We publish ours on the commission and conflict of interest page.
Never buy your business
A distributor must not rebate or pass back commission, in cash or in kind, and must not lure you with gifts or inducements (Code 1(d)). If someone offers you a cashback to invest through them, that is not generosity; it is a breach.
Never sell on a promised number
A distributor must not sell using assured, guaranteed or indicative returns (Code 4(g)). No one can make a mutual fund's return certain, so no honest distributor will try. If you are shown a confident number and told to expect it, treat it as a warning, which is exactly what our mis-selling red flags page is about.
If you ever feel a distributor is not meeting these duties, you have options, and you are welcome to talk to us.
Frequently asked questions
Does my distributor have to tell me how much commission they earn?
Yes. Under Code 4(e), a distributor must disclose the commission it receives across the different competing schemes, so you can see any conflict of interest before you invest.
Can a distributor give me a cashback or gift to invest through them?
No. Code 1(d) prohibits rebating and passing back commission in cash or in kind, and prohibits attracting investors through inducements like gifts. A distributor offering this is breaking the Code.
Can a distributor promise me a return?
No. A distributor must not sell using assured, guaranteed or indicative returns. Anyone who promises you a specific return on a mutual fund is acting against the Code, and against common sense.
This is general information, not a recommendation for your situation. If it would help to talk it through, we are happy to. Talk to Nico Wealth.
The information on this website is general and educational. It is not financial, tax, or legal advice, and not a recommendation for your situation. We try to keep it accurate and up to date, but it may contain errors or become outdated. Please verify important details from official sources, and consider your own circumstances, before acting.
Sources
- AMFI Master Circular for Mutual Fund Distributors, AMFI/MFD-CIR/32/2025-26 (14 January 2026) · Code of Conduct (Chapter 7), clauses 1, 4
Last verified:
Have a question about this?
If you would like to talk it through with a real person, Nico Wealth is here. No obligation.
Talk to Nico Wealth