New Delhi: In a move to safeguard investors, the Securities and Exchange Board of India (SEBI) has tightened regulations on financial influencers. Brokers and mutual funds will no longer be allowed to collaborate with unregulated financial influencers for marketing and advertising purposes.
This decision comes amidst concerns about unregulated individuals and entities influencing investment decisions through misleading claims. SEBI aims to create a clearer distinction between qualified financial advisors and online influencers who may lack proper qualifications or regulatory oversight.
The new regulations prohibit SEBI-regulated entities and their agents from any association with individuals or entities providing unregistered investment advice or recommendations. This ban extends to financial transactions, client referrals, information sharing through technology systems, and any other form of partnership with unregulated influencers.
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However, SEBI recognizes the value of investor education. The restrictions will not apply to qualified financial advisors regulated by SEBI or individuals solely focused on educating investors. These educators cannot provide financial advice, predict returns, or guarantee performance.
The onus now falls on SEBI-regulated entities to ensure their associates exclusively focus on investor education and adhere to these guidelines.
SEBI is also casting its net towards digital platforms. The new rules extend to online platforms that fail to prevent the use of their platform for disseminating unregulated investment advice or claims of guaranteed returns. These platforms must demonstrate robust mechanisms to prevent such activities, or face potential regulatory action from SEBI.
This move by SEBI is a significant step towards protecting investors from potentially harmful and misleading financial advice. The regulations aim to promote a more transparent and responsible financial influencer ecosystem, ultimately benefiting both investors and legitimate financial institutions.
