The AMFI (Association of Mutual Funds in India) extends brokerage cooling-off period from 6 months to 12 months for distributors receiving trail commissions after an investor changes their ARN (distributor) code. This decision responds to industry concerns about the misuse of existing rules, particularly by large distributors like banks. Under the new guidelines, if an investor switches from Distributor A to Distributor B on August 25, 2025, Distributor B will only be eligible for trail commission from August 24, 2026. If the ARN code changes back to Distributor A within the 12-month period, for example on June 25, 2026, the cooling-off period resets and postpones the commission eligibility to June 24, 2027.To prevent unauthorized transfers, AMFI has required a new declaration form that must include wet signatures from both the investor and the new distributor. Additional safeguards are included:
- SMS alerts to investors on the day after a change request is received.
- A 3-day window for investors to report unauthorized changes.
- Broker code changes will be processed only after 11 days if no complaints are raised.
These updated best practice guidelines will take effect on August 11, 2025.
