Skip to content

NISM Certifications · NISM-Series-V-A: Mutual Fund Distributors · Fund Distribution and Channel Management Practices

Which of the following best describes the code of conduct expectation for a mutual fund distributor regarding mis-selling?

A distributor must recommend schemes that suit the client's needs and risk profile and must disclose relevant information, including commissions received. Choosing products for higher commission, promising returns or churning the portfolio constitutes mis-selling and violates the AMFI code of conduct.

  1. ARecommend the scheme with the highest commission irrespective of client suitability
  2. BEnsure the product recommended is suitable for the client's risk profile and disclose all relevant information including any commissionCorrect
  3. CGuarantee returns to attract investors
  4. DAdvise switching of schemes frequently to earn more commission

Explanation

AMFI's code of conduct requires distributors to act in the investor's interest, assess suitability and make fair disclosures. Recommending on commission basis, guaranteeing returns, or churning portfolios are forms of mis-selling and are prohibited.

Did you get it right without looking?

One question tells you little. A timed set on Fund Distribution and Channel Management Practices shows your real accuracy, how long you take and where you lose marks.

Practise Fund Distribution and Channel Management PracticesFree diagnostic mock

More Fund Distribution and Channel Management Practices questions