Finfluencer noise will no longer distort your thinking about investments
Financial influencers, or finfluencers, have become a force to be reckoned with. On the one hand, they attract their followers and make them aware of financial products, but on the other, some of them distort or misinform.
But with the Securities and Exchange Board of India stepping in, the game is about to change.
The selling of investment products is set to undergo a major change, and it's all thanks to SEBI's latest intervention.
If you've been following the rise of financial influencers—or 'finfluencers' as they're snazzily called—you know they've been both a blessing and a curse.
But now, SEBI is stepping in to play referee, and things are about to get really interesting.
Finfluencers Rising
Let's face it, finfluencers have been the talk of the town. They've made finance cool, relatable, and—even fun.
But it's not all sunshine and flower petals.
Some of the finfluencers have been testing regulatory patience with their shenanigans. Imagine a celebrity chef giving investment advice.
In the world of investments, celebrity endorsements in the garb of advice often hold a significant advantage.
However, it's crucial to understand the peril of "directed deference"—the potential dangers of unquestioningly following expert advice.
This tends to create a false sense of security and leaves you vulnerable to unforeseen risks. So, it's essential to examine the reliability of these recommendations before making investment decisions.
SEBI Wields the Baton
Just when you thought you had it all figured out, SEBI has moved to shake things up and keep a check
New rules are in the pipeline, aimed at protecting you, the investor, from the murky waters of financial advice on social media.
Consultation Paper
SEBI didn't just wake up one day and decide to regulate finfluencers.
They have released a consultation paper detailing their proposals, and it's chock-full of interesting norms that gives an insight into the regulator’s thinking on the issue of finfluencing.
From defining what a finfluencer is to disrupting their revenue models, SEBI is leaving no stone unturned.
They have sought views on the proposed regulations.
Transparency and Conduct
The proposed SEBI norms require the registration of finfluencers, and they will have to display their registration details and follow specific codes of conduct.
They must comply with advertisement guidelines issued by SEBI and other recognized bodies.
Protection Against Misuse
SEBI advises its registered intermediaries to take active measures against any unregistered entity misusing their name or services. Legal action, including filing cases for impersonation and fraud, should be pursued if necessary.
No More Playing Both Sides
SEBI-registered financial entities can kiss collaborations with unregistered finfluencers goodbye.
And that's not all; they can't share your private data with these influencers either.