New ASCI guidelines require finfluencers to be registered with SEBI

As per the new guidelines, influencers endorsing health and nutrition products making claims must possess relevant qualifications such as medical degrees or certifications in areas like nursing, nutrition, dietetics, physiotherapy, or psychology, depending on the nature of the advice provided. These qualifications must be prominently disclosed.

For 'finfluencers', their SEBI registration number must be prominently displayed alongside their qualifications. For other financial advice, influencers are required to hold appropriate credentials, including licenxes from the Insurance Regulatory and Development Authority of India (IRDAI), chartered accountant qualifications, or a company secretaryship. Furthermore, compliance with disclosure prerequisites outlined by financial sector regulators is expected.

A financial influencer, or 'finfluencer', is a person who gives information and advice to investors on financial topics — usually on stock market trading, personal investments like mutual funds and insurance —primarily on various social media platforms.

There has been an increased watch on the financial influencers as many unethical trading practices have been noticed in the market.

Notably, the SEBI on May 25 penalised and barred PR Sundar from trading for a year over an alleged violation of investment advisers' norms. In a case that dates back to 2022, Sundar, his company Mansun Consulting, and co-promoter of the company Mangayarkarasi Sundar, have settled with the SEBI complaints alleging they were providing investment advisory services without the requisite registration from the regulator.

The revisions come as a response to concerns about the potential risks associated with inaccurate and deceptive advertising content in crucial sectors such as BFSI, as well as health and nutrition products and services. Misleading content within these categories could profoundly affect consumer well-being and financial security.

ASCI's guidelines specifically target advertising content where there is a material connection between the influencer and the promoted brand, product, or service.

It's worth noting that the Department of Consumer Affairs published its influencer guidelines on August 11, 2023, mandating enhanced disclosures for endorsements of health and wellness products and services. Violations of these guidelines could result in penalties under the Consumer Protection Act (2019).

Manisha Kapoor, CEO and Secretary General of ASCI, emphasised the need for expertise in critical areas like health and finance. "As losses to consumers could be substantial and serious due to improper advice in the categories of health and finance, it is necessary that influencers in these two critical categories are qualified to provide advice and that these qualifications are stated upfront, whenever they put out such advertising posts."

"Unlike celebrities whom consumers clearly know the fields they belong to, consumers may not necessarily know which influencers have the necessary qualification and expertise to provide the right advice and also inform them of any associated risks. To safeguard consumers from the consequences of advice from non-experts, these additional requirements should now be followed by health and financial influencers,” she said.