SEBI mulls over curbs on finfluencers to limit their association with registered intermediaries

The paper defines finfluencers as persons who provide information on various financial topics such as investing in securities, personal finance, banking products, insurance, real estate investment, etc. through social media platforms such as Instagram, Facebook, YouTube, LinkedIn, and Twitter. Finfluencers can influence the financial decisions of their followers.

“Thus, the activities of finfluencers may deal in areas regulated by financial sector regulators such as SEBI, RBI, PFRDA, and IRDA,” it added.

SEBI said that as these finfluencers are not bound by the code of conduct of the market regulator, they may not disclose any potential conflict of interest such as their association with or interest in the products, services, or securities that they promote

“SEBI has come across instances where SEBI registered intermediaries/regulated entities may be relying on such unregistered/unregulated finfluencers to promote their products and services,” the market regulator said.

Disrupt revenue model of finfluencers

The paper proposes to disrupt the revenue model for such finfluencers so that the perverse incentives in the ecosystem reduce. It also said that action will taken against all unregistered finfluencers who breach SEBI regulations

“No SEBI registered intermediaries/regulated entities or their agents/representatives shall, directly or indirectly, have any association/relationship in any form, whether monetary or non-monetary, for any promotion or advertisement of their services/products, with any unregistered entities ( including finfluencers),” the SEBI release said.

The market regulator cleared that all entities registered or regulated by SEBI stock exchanges or AMFI shall not share any confidential information of their clients with any unregistered entities.

“Finfluencers registered with SEBI or stock exchanges or AMFI in any capacity shall display their appropriate registration number, contact details, investor grievance redressal helpline, and make appropriate disclosure and disclaimer on any posts. They shall also fully adhere to the code of conduct under the terms of their relevant registration,” the paper said.

“Such entities shall comply with the advertisement guidelines issued by SEBI, stock exchanges, and SEBI-recognized supervisory body from time to time,” it added.

The market regulator has invited public comments on the proposals which can be submitted to the market regulator by 15 September.

Updated: 25 Aug 2023, 10:15 PM IST