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Our Bureau

New Delhi, Sept. 9

A Government committee on investor protection is not averse to putting in place a system of fee-based as well as commission-based models in the transition to the proposed zero-commission structure for financial products by April 2011.

This was stated by the six-member committee’s chairman, Mr D. Swarup, also Chairman, Pension Fund Regulatory and Development Authority (PFRDA).

The panel’s draft report, released last week, proposes phasing out of upfront commissions paid to agents by April 2011. This has significant implications for the insurance industry.

“Insurance companies need to remove the bias towards selling the policy with the highest commission,” the draft report said. Mutual funds and the new pension scheme are already no-load products.

Mr Swarup told reporters here today that the committee’s final report would be submitted to the Government by the end of this month.

The draft report says the upfront commission embedded in the premium paid should be reduced to no more than 15 per cent immediately, from 16.25 per cent.

This should, it says, be brought down to 7 per cent in 2010 and commissions should be completely phased out by April 2011.

More Stories on : Insurance | Pension Plans

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