Finfluencers need to register with Sebi and disclose credentials on social media: ASCI

It has been made mandatory for financial advisors or “finfluencers” to register with the Securities and Exchange Board of India (Sebi) and disclose their credentials in its revised advertising guidelines.

According to a circular by the Advertising Standards Council of India (ASCI) on August 17, 2023, the mandate is applied to all finfluencers working in the banking, financial services, and insurance (BFSI) sector offering investment advice.

It is necessary that financial experts possessing certifications from recognised institutions must clearly “disclose” their certified expert status and credentials.

Display of Finfluencers’ Sebi registration number and qualifications in adverts or on social media platforms are also necessary.   

In the case of other financial advice, they must have appropriate credentials, such as a license from the Insurance Regulatory and Development Authority of India (IRDAI), chartered accountancy (CA), or a company secretaryship. Adherence to disclosure is a prerequisite.

These guidelines will be applicable whenever they disseminate information, endorse products or services, or make assertions about commercial goods and services.

ASCI stated, “Influencers providing advice or promoting or commenting on merits or demerits related to commercial goods and services, banking, financial services, and insurance and health and nutrition, must have the necessary qualifications and certifications to provide such information and advice to consumers.”

The guidelines also include that all advertisements posted by social media influencers “must carry a disclosure label that identifies it as an advertisement”.   

The updates directives come as a result of concerns about potential risks linked with misleading and deceptive advertising content within critical sectors like BFSI and health and nutrition products and services. The guidelines were originally introduced in May 2021 and were aimed at helping consumers identify promotional content and make informed decisions. In order to increase transparency and safety of investors on digital platforms, ASCI has now amended them.    

Manisha Kapoor, CEO and Secretary General of ASCI, said, “Unlike celebrities whom consumers know the fields they belong to, consumers may not know which influencers have the necessary qualification and expertise to provide the right advice and inform them of risks.”

She added that these additional requirements should be followed to safeguard consumers.