As of now, all mutual fund investors, irrespective of the mode of investment, are required to pay entry load while buying a mutual fund. This load goes towards meeting distributors’ commissions. With this regulation in place, all investors who buy funds directly from the office of an asset management company, its collection centre or its website — and not through any distributor, agent or broker — will not be required to pay an entry load.

Asked if Sebi was planning to impose some kind of variable load, the official said, “We thought of variable loads but it would be tough for an investor to negotiate with the fund on how much load to pay and would have been a useless regulation.”

Apart from variable loads, the other idea the industry had been throwing up in response to Sebi’s proposal in August has been to introduce separate no-load funds. But finally, it is not separate no-load funds, but “a no load option on each and every scheme” that will be introduced, the officials said.

The proposal had set the cat among the pigeons, with many fund houses arguing that distributors worked in the larger benefit of the mutual fund industry and hence the industry needed them. On the defensive side, their argument was: Investors will come to the distributors for advice and then will go out and invest directly in which case the distributors will be at a loss.

But with this regulation, all set to become a reality in the year 2008, distributors will have to raise the level of the advice they provide and become financial planners rather than mere product sellers.