SEBI just released a consultation paper that changes how mutual funds can charge their fees. Here are two incentives that SEBI is trying to change.

1. Mutual funds today earn when they accumulate money. SEBI is enabling them to instead earn when they perform better.

2. Distributors hold sway over their customers and switch them to new funds because they receive higher commissions. SEBI is going to be changing that.

The consultation paper does raise some questions around overregulation and to what extent SEBI should dictate how mutual funds make money.

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