The Securities and Exchange Board of India (SEBI) has proposed a major change in advertising rules for the financial sector.
If approved, stockbrokers, mutual fund companies, investment advisors, and portfolio managers will be allowed to use celebrities to promote their brand names and companies.
However, celebrities will not be allowed to endorse any specific investment product, scheme, or service.
What Is SEBI’s New Proposal?
The proposal is part of SEBI’s new Common Advertisement Code (CAC), which aims to make advertising rules simpler and more uniform across the financial industry.
Under the proposed rules, celebrities can appear in advertisements to promote a company’s brand image. However, they cannot encourage investors to buy a particular mutual fund, stock, or investment product.
At present, celebrity endorsements are allowed only at the industry level for mutual fund companies and require prior approval from SEBI.
Easier Advertising Rules for Financial Firms
SEBI has also proposed relaxing advertisement approval requirements for several financial entities.
Stockbrokers, investment advisors, research analysts, and online bond platforms may no longer need approval before publishing advertisements.
Instead, they will have to submit the advertisement details within 24 hours after publication.
This move is expected to reduce paperwork and speed up marketing activities for financial firms.
New Rules for Ratings and Rankings
Companies will be allowed to highlight ratings or rankings in advertisements only if they come from recognized agencies such as PaRRVA (Paid Risk and Return Verification Agency).
Advertisements will also have to clearly mention that ratings and rankings should not be the only factor considered while making investment decisions.
Short Ads Must Include Warning Links
SEBI has also proposed special rules for short-format advertisements such as SMS messages, app notifications, and pop-up ads.
Since these formats have limited space, companies will be required to provide a link that directs investors to the complete risk warning and other important information.
The proposal is aimed at making financial advertisements more transparent while ensuring that investors receive all the necessary details before making investment decisions
