Protecting investors from misleading financial advice and ensuring that all financial influencers operate within a regulated framework, The Securities and Exchange Board of India on Thursday set the ground rules for unregistered financial influencers, or ‘finfluencers,’ prohibiting regulated entities from dealing with them.
As per the ‘Guidelines for Influencer Advertising in Digital Media’ released by Advertising Standards Council of India, ‘influencer’ means “someone having access to an audience and power to affect such audiences’ purchasing decisions or opinions about a product, service, brand or experience, because of the influencer’s authority, knowledge, position, or relationship with their audience”
Financial influencers, commonly called ‘finfluencers’, are persons who provide information and/or advice/recommendations on various financial topics such as investing in securities, personal finance, banking products, insurance, real estate investment, etc. through their engaging stories, messages, reels and videos on various social/digital media platforms/channels. These finfluencers are usually persons who are neither registered with the SEBI or other financial sector regulators nor permitted under any regulation issued by the SEBI to provide such advice or recommendation in respect of or related to a security or securities under the purview of SEBI
SEBI has already issued warning letters to such unregistered entities in July 2024 & August 2024 providing unregistered investment advisory related services in security market without obtaining registration with SEBI unde the capacity of Investment Advisor. (Warning letters are avaialble to view on official website of SEBI.
It has announced that any person regulated by the SEBI or the agents of such persons shall not have any association directly or indirectly with any other person who directly or indirectly provides advice or recommendation or make any implicit or explicit claim of return or performance, in respect of or related to security or securities under the purview of the SEBI unless such a person is permitted to do so.
It shall be the responsibility of the person regulated by the SEBI or the agents of such persons to ensure that the person with whom it is associated does not indulge in prohibited activities. The standards for implementation in this regard shall be evolved by the respective Industry Standards Forum (ISF) in consultation with SEBI.
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