The Securities and Exchange Board of India (SEBI) on August 25 released a consultation paper on the association of SEBI-registered intermediaries and regulated entries with unregistered entities including influencers. The regulator body has advised all registered financial entities to cut ties with registered financial influencers and investment advisors (IAs).
The paper said, “In recent times, activities of financial influencers (‘finfluencers’) have attracted wide public and media attention. These finfluencers are usually unregistered entities providing catchy content, information, and advice on various financial topics to their several followers. While some of them may be genuine educators, many of them are effectively unregistered and unauthorized Investment Advisers (IAs) or Research Analysts (RAs). A separate consultation paper proposes a unique fee payment platform for registered IAs and RAs that should help investors identify, isolate and avoid unregistered entities/finfluencers. Other unregistered entities/finfluencers may be effectively enticing their followers to purchase products, services, or securities in return for undisclosed compensation from platforms or producers. This paper seeks to restrict the association of SEBI registered intermediaries/regulated entities with such unregistered finfluencers, to curb the flow of such compensation.”
The growing trend of financial influencers, commonly referred to as ‘finfluencers’, doling out half-baked financial advice, and risking the hard-earned money of their followers has been an area of concern for the government’s. Sebi had taken a stand to regulate the unorganized sector and bring a semblance of order.
In light of these updates, ASCI in its new guidelines has said finfluencers operating within the BFSI realm, can now offer investment-related advice only after being registered with the Securities and Exchange Board of India (SEBI).
Their registration number must be prominently displayed alongside their name and qualifications. For other financial advice, influencers must possess appropriate credentials such as a license from the Insurance Regulatory and Development Authority of India (IRDAI), be qualified as a chartered accountant, hold a company secretaryship, etc. Moreover, they are expected to adhere to all disclosure prerequisites as stipulated by financial sector regulators from time to time.