Investors often come across advertisements featuring famous celebrities promoting financial products.
However, this could soon change if SEBI’s latest proposal is implemented.
The market regulator has proposed new advertising guidelines aimed at making investment-related advertisements more transparent and investor-friendly.
The move is part of the Common Advertisement Code (CAC), which seeks to simplify advertising rules while protecting investors from misleading promotions.
Celebrities May Face Restrictions
Under the proposed rules, celebrities will only be allowed to endorse a company at the brand or corporate level.
This means they may no longer be able to encourage people to invest in a specific mutual fund, stock, or other investment product.
At present, mutual fund companies can use celebrity endorsements at the industry level, but only after obtaining prior approval from SEBI.
The new proposal aims to tighten these rules further and reduce the influence of celebrity-backed investment recommendations.
No Prior Approval for Many Financial Firms
SEBI has also proposed some relief for financial service providers.
Stock brokers, investment advisors, research analysts, and online bond platforms may no longer need to obtain approval before publishing advertisements.
However, there is an important condition.
These entities will be required to submit the advertisement details within 24 hours of publication.
New Rules for Ratings and Rankings
The regulator also wants stricter standards for advertisements that highlight ratings or rankings.
Companies will only be allowed to use ratings in advertisements if they have been issued by a recognized agency, such as PaRRVA (Paid Risk and Return Verification Agency).
In addition, advertisements must clearly mention that ratings and rankings should not be considered the only factor when making investment decisions.
Changes for SMS and Short Advertisements
SEBI has also proposed easier compliance rules for short-format advertisements such as SMS messages, app notifications, pop-ups, and other limited-space formats.
Since these advertisements cannot display lengthy warnings, companies will be required to provide a link directing investors to the complete disclaimer and risk information.
The proposed changes are intended to make financial advertisements clearer, more transparent, and less likely to influence investors through incomplete or misleading information.
