The Securities and Exchange Board of India (SEBI) has proposed a major change in advertising rules for financial companies.
Under the new proposal, stockbrokers, mutual fund companies, investment advisors, and portfolio managers may be allowed to use celebrities to promote their brand names.
However, celebrities will not be allowed to recommend or 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 simplify advertising rules across the financial sector.
If approved, celebrities can appear in advertisements that promote a company’s overall brand or corporate identity. However, they cannot encourage investors to buy a particular mutual fund, stock, or investment product.
At present, celebrity endorsements are allowed only at the mutual fund industry level and require prior approval from SEBI.
Easier Advertising Rules for Financial Firms
SEBI has also proposed easing some advertising requirements for financial companies.
Stockbrokers, online bond platforms, investment advisors, and research analysts may no longer need prior approval before releasing advertisements. Instead, they will have to submit the required information to SEBI within 24 hours after the advertisement is published.
This move is expected to reduce paperwork and make advertising processes faster.
New Rules for Ratings and Short Ads
Under the proposal, companies can use ratings or rankings in advertisements only if they come from a recognized agency such as PaRRVA (Paid Risk and Return Verification Agency).
Advertisements will also have to clearly mention that ratings should not be the only factor considered while making investment decisions.
For short-format advertisements such as SMS messages, pop-ups, and app notifications, SEBI plans to allow a simplified disclosure format.
Since space is limited, companies will be required to provide a link where investors can read the complete warning and important information before making any investment decision.