SEBI might destory the industry

I have been following growth of mutual fund Industry for last 10 years. It has grown to huge proportion to what it was 10 years back; days when UTI dominated the MF category, few PSU mfs such as BOB, CanBank, SBI mfs operated and very few good quality private mfs such Templeton Franklin existed.
What makes me write this post is the fact that MF industry is on verge of destruction imposed by the none other than the regulator, SEBI, as clearly pointed by http://www.moneycontrol.com/mccode/news/article/news_article.php?autono=409014
Over the years, numerous regulations such as PAN quotation, KYC etc have been introduced for better identification of investors. AMFI (Association of Mutual Funds in India), an SRO (self regulatory organization ) and SEBI have played crucial role in growth of regulations. But are we not over regulating the industry as pointed out in the article? Are we not killing the MF industry in the name of enhancing investor interest? Is SEBI not crossing the limits by dictating what and how the distribution costs should be managed by mutual funds in India?
While you are forcing mutual fund advisors and agents to charge the clients for services provided to them, same is not true for other financial instruments such as Insurance and Post Office deposits. Why doesn't IRDA also follow the same principle and ask millions of Insurance advisors to charge their customers instead of them being paid by insurance companies?
Moreover, is the investor knowledgeable enough to decide how much should be paid for the service? If yes, Has SEBI identified service charges that need to be paid by customers?
Are we not doing too much too soon? Are not discouraging and dismantling a distribution channel, which is already very fragile?
SEBI seems to be playing an unjust role with AMFI and MFs playing the role of mute spectators. We have been clamoring about the need to grow mutual fund industry and its penetration in India. Instead of spreading the industry, the regulator, AMFI and Mutual funds are eager to put the last nail in its coffin.