SEBI to clamp down on Finfluencers: Puts out consultation paper, to accept public suggestions till Sep 15

Capital markets regulator SEBI, on Friday, released a consultation paper that proposes various measures to limit Association between Finfluencers and registered intermediaries.

The proposal comes as a disruption to the revenue model of Finfluencers or digital and social media influencers broadly operating in the space of financially literacy and business. The Consultation Paper describes 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.

"In recent times, activities of financial influencers or 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", the Consultation paper said.

Also Read: Finfluencers should register with SEBI, IRDAI: ASCI

The paper also says that as these finfluencers are not bound by the code of conduct of the market regulator, they may have to disclose any potential conflict of interest such as their association with or any material interest in the products, services, or securities that they promote.

This disclosure is likely to affect the revenue model of these Finfluencers. SEBI also said that it intends to take action against all unregistered finfluencers who breach the proposed 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.

All entities registered or regulated by SEBI stock exchanges or AMFI shall not share any confidential information of their clients with any unregistered entities. The regulator has also warned of Penal action if this is not abided.

The SEBI has also sought comments from the public to restrict the association of SEBI-registered intermediaries and regulated entities with unregistered finfluencers. Public can send their views to SEBI until 15th September