Curated By: Business Desk
Last Updated: September 04, 2023, 12:41 IST
This step will protect influencers from fraud.
Under a proposal put forth by SEBI, financial influencers would need to be registered with the regulator and adhere to specific guidelines.
The rise of financial influencers who charge hefty amounts like lakhs of rupees for a post on social media has introduced a new way for people to access and interpret financial information. In order to provide accurate and unbiased information to investors, the market regulator, the Securities and Exchange Board of India (SEBI) is preparing to monitor financial influencers.
However, now they will have to come under the purview of the regulator because SEBI is preparing to control their rapidly increasing number. Firoz Aziz, Deputy Chief Executive Officer (Deputy CEO), Anand Rathi Wealth, told PTI that SEBI’s proposed step ensures that investors get accurate and unbiased information. This will also help in protecting them from fraud.
Under the proposal, financial influencers would need to be registered with SEBI and adhere to specific guidelines. Also, it has been proposed to ban unregistered financial influencers from partnering with mutual funds and stockbrokers for promotional activities.
While many financial influencers provide valuable insights, there has been a growing concern over the potential risks associated with unregulated financial influencers who might offer biased or misleading advice. They usually work on a commission-based model.
In addition, many of them make money from referral fees or profit sharing for promoting the product, channel, platform or services, or they get compensation directly from social media and other platforms. To address the risk associated with financial influencers, SEBI floated a consultation paper last month proposing to restrict the association of registered intermediaries or regulated entities with unregistered influencers.
By requiring financial influencers to register with SEBI and adhere to specific guidelines, the regulator is setting a standard for accountability and expertise in the sector, Sonam Srivastava, Founder and Fund Manager at Wright Research, PMS, said.
Meanwhile, the Advertising Standards Council of India (ASCI) has made it mandatory for financial advisors or financial influencers to register with the SEBI and disclose their credentials in its revised advertising guidelines.
