SEBI is planning to introduce new advertising guidelines aimed at making investment-related advertisements more transparent and investor-friendly.
The proposal is part of the Common Advertisement Code (CAC), which seeks to bring different advertising rules under one framework, reduce compliance burdens for companies, and better protect investors.
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Celebrities May Face New Restrictions
One of the biggest proposed changes relates to celebrity endorsements.
Under the new rules, celebrities may only be allowed to promote a company’s brand or corporate image.
They will not be permitted to encourage investors to put money into a specific mutual fund, stock, or investment product.
At present, mutual fund companies can use celebrities for industry-level campaigns, but only after obtaining prior approval from SEBI.
The proposed rules are intended to prevent investors from making financial decisions solely based on celebrity influence.
No Prior Approval for Many Advertisements
SEBI has also proposed easing the approval process for several market participants.
Stock brokers, investment advisors, research analysts, and online bond platforms may no longer need to obtain approval before publishing advertisements.
However, they will still have to share the advertisement details with the regulator within 24 hours of publication.
This is expected to reduce paperwork while maintaining regulatory oversight.
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 come from a recognized agency, such as PaRRVA (Paid Risk and Return Verification Agency).
In addition, every such advertisement must clearly state that ratings and rankings should not be the only factor considered while making investment decisions.
Easier Rules for Short Advertisements
SEBI has also proposed some flexibility for short-format advertisements such as SMS messages, mobile notifications, and pop-up ads.
Since these formats have limited space, companies may not be required to display lengthy warnings directly in the advertisement.
Instead, they will have to provide a link that allows investors to access the complete disclaimer and important risk-related information before making any investment decision.
What This Means for Investors
If implemented, these changes could make investment advertisements more transparent and less dependent on celebrity influence.
The proposed framework aims to help investors make informed decisions based on facts and risks rather than promotional claims, while also simplifying advertising compliance for financial companies.