Obviously, brokers are unhappy that the entire broking industry was being penalized for the actions of just one broker. The current set up is convenient for brokers for a number of reasons. Firstly, they control the process and don’t need to share client details with the AMC or the registrar. Secondly, there is a more practical issue. We are aware that entry loads are banned by SEBI since 2009. However, brokers are free to agree upon a service charge payable by the client, based on the service provided. Such charges are deducted by the broker before paying out of the pool to the customer. That remains an open issue.

Of course, the Clearing Corp route is still open to investors. Today nearly 52% of the MF investments are through the pooled route while the balance 48% is through the non-pooled route. An important way of non-pool investing is to use the stock exchange platform (like BSE STAR-MF). Here the funds are routed through the clearing corporation affiliated to the stock exchange and there is no broker pool account involved anywhere. Hence the clearing corporation route will still be valid even after broker pooling is banned. It may create hiccups but will be good for MF investors overall!