Finfluencers Rejoice At ASCI Go-Ahead For General Advice And Promotion On Social Media After Sebi Scrutiny

(MENAFN- Live Mint) Health and financial influencers do not need professional qualifications to share generic information about financial or health products and services, the advertising regulator said on Monday.

However, registration with the Securities and Exchange Board of India (Sebi) registration or other relevant financial credentials are still required for financial influencers to give“technical” advice on social media, as per both the Advertising Standards Council of India (ASCI) and Sebi.

“The focus remains consumer-centric. However, influencers and advertisers need to follow rules laid down by the financial regulators in addition to being compliant with the industry codes laid down by Asci,” clarified Manish Kapoor, secretary general of Asci.

The Asci codes permit influencers to promote generic financial products or services, provided no technical or specific financial advice is being offered. Brands can engage a broader range of influencers, provided they do not stray into offering expert advice either, Kapoor underlined.

Also read | Sebi looking to bring finfluencers under regulatory ambit

“Wherever expert guidance is involved, the requirement for proper qualifications and clear disclosure of credentials continues to stand firmly. This maintains the integrity of communication in sensitive sectors, while allowing greater creative freedom for non-experience,” Kapoor added.

Tightening regulation

Sebi has been tightening its regulations around financial influencers. Finfluencers offering stock tips as part of“investor education” must now use stock prices at least three months old-live prices are prohibited.

Further, Sebi-registered entities cannot directly or indirectly engage with influencers for promotional activities, including through third-party marketing agencies.

Sebi also prohibits making claims-either express or implied-regarding returns or performance on any security without its permission.

Violations of these norms can lead to severe penalties, including suspension or cancellation of registration.

Asci's move was welcomed by finfluencers who could potentially grab more brand deals.

Relieved creators

"The financial creators are relieved as Asci guidelines eases its guidelines. Initially, after Sebi issued notifications to end association with financial influencers, brands were scared as they did not know what was happening, so they pulled back,” said Ayush Shukla, founder of talent management agency Finnet media that works closely with finfluencers.

“For the initial six to nine months, financial influencers struggled to get brand deals. However, in the past three months, with more clarity on Sebi's guidelines the brand deals are gaining momentum again. We have seen a significant uptick in brand deals for our financial creators and Asci's move is expected to shore that up further," Shukla added.

Also read | Sebi tweaks stocks' F&O norms, curbs use of finfluencers

Financial influencer Pranjal Kamra said he always felt more comfortable in recommending a platform rather than an asset.“If financial influencers recommend transactional platforms, after the transaction, the assets are held by the exchanges, and depositories and regulated accordingly, keeping influencers clear of trouble if they only promote the platform and do not get into the technical details,” he said.

“This also gives influencers clarity on what kind of deals they can seek rather than just making them feel demotivated...I think, it should also help financial influencers to restore some income through brand deals as they start working with non–Sebi-regulated products and services in financial sector,” Kamra added.

Authority stays

While Asci's move provides breathing room for influencers and brands, experts caution that it does not dilute Sebi's authority.

Pritha Jha, partner at Pioneer Legal, said that Sebi being a statutory body, nothing Asci does or publishes, could in any way take away from Sebi's regulations.

On the distinction between generic and technical information, Jha explained,“An individual saying that diversifying your investments is good, is very different from saying how much of your investment should be invested in which SIP, or which fund. Asci is trying to differentiate between the two.” She emphasized that if Sebi finds violations, it will act, irrespective of Asci's updated guidelines.

Also read | Meet the new YouTube finfluencers: teens 'making 36-40%' returns trading options

Tanu Banerjee, Partner at Khaitan & Co., said Asci's decision to exempt "generic promotions" from certification requirements offers flexibility and recognizes the need for influencers to engage with their audiences in a less rigid manner.

“While Asci's guidelines may help simplify content creation for influencers, it's crucial that influencers and BFSI companies still operate within Sebi's framework,” she warned.

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