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  • Puneet Srivastava

Bridging the Regulatory Gap: A Framework for Finfluencers in India

[Puneet is a student at West Bengal National University of Juridical Sciences.]

Financial influencers, or finfluencers (as they are commonly called), are type of influencers on social media who advise their followers for investing in the stock market, mutual funds or other indexes. This category of influencers has gained prominence in recent years across the globe. While advises may be harmless, there are two big concerns. One, due to the absence of any kind of regulation, the advice may not actually be “expert opinion” and a layman may not be able to differentiate between it. Two, these finfluencers may engage in unethical practice of promoting certain stocks in lieu of receiving benefits for themselves. This may or may not be due to the interference of the stock they may suggest. Due absence of regulation, it will be difficult to put any liability on the finfluencer or protect the individual. 

While the issues relating to finfluencer regulation has been covered at multiple forums, in this article, the author seeks to analyze the gaps in current Indian regulatory framework. This will be followed by solutions and suggestions that the author proposes could be applied by SEBI.

Gap Analysis and Considerations for Effective Regulation

Gap analysis

The oversight of financial advisors and the regulation of investment advice are regulated by the Securities and Exchange Board of India (SEBI) in India. The SEBI (Investment Advisors) Regulations 2013 is a framework for people who give financial advice for a fee. The regulations contain several norms for financial advisers such as being Certified Financial Planner (CFP) certificated and adhering to certain codes of conduct. However, it is no longer viable to apply the same rules to contemporary financial advisors without considering the developments in social media and digital economy.[1]

Lack of specific rules on finfluencers is now evidently the main loophole in Indian system. A finfluencer may not possess any formal qualifications because anyone could actually provide some sort of investing advice online irrespective their knowledge or experience about finances. Thereby, this creates an unreliability on information given to investors since there is no one controlling them.

In addition, finfluencers are not obligated to abide by disclosure laws. Disclosing these conflicts of interest is not mandated by any law either. Consequently, cases where finfluencers endorse investments that they will benefit from monetarily might occur.

Finally, the current framework does not have a framework for online financial advice content management. False or inaccurate information can spread rapidly on social media platforms, causing viewers (especially young people who are unfamiliar to the market) to make more investment decision. These significant gaps in the Indian regulatory space make the investors exposed to risky financial content.

Additional considerations

However, there is still a need to consider some other things in order to better protect investors and create a conducive fintech culture. Above all, safeguarding young rookie investors and their learning is the top priority. The reason why this becomes even more important today is that people go for social media even for the smallest things in life and learn first financial issues online rather than sitting at school benches. A comprehensive approach beyond regulating “finfluencers” is of paramount importance.

These programs must equip people with knowledge and skills needed to critically appraise digital financial guidance. This would require working with educational establishments, providing online materials or arranging instructional seminars. The desire here is to teach potential investors about finance so that they can make sound decisions and avoid the risks associated with internet advice without regulation.

Moreover, the SEBI redressal mechanism against finfluencers should be made more effective to safeguard investors. This will enable investors report and seek relief for wrong investment advice themselves. It should be mandated by SEBI that financial articles available on the internet should come with mandatory plain risk explanations to educate readers about dangers associated with investing. Also, requiring finfluencers to disclose their historical returns, if any, can provide audiences with useful information about them from which they can determine the credibility of their recommendations. 

It is important not to forget that too many regulations might stifle innovation and prevent real financial influencers who bring insight from emerging. Consequently, this proposed framework must find a middle ground that protects investors and promotes growth within the fintech industry.

One approach to strike this balance is by creating a regulatory sandbox framework. By doing so, it would encourage innovation and reduce associated risks that come with an entirely uncontrolled activity hence enabling the operation of emerging fintech firms and finfluencers under lax laws for a given period of time.

The other thing to think about is having self-regulatory organizations (SROs) for finfluencers only. Business executives can make their own SROs which will generate and implement their own code of conduct specifically addressing online financial advisory peculiarities. It has been seen that this way, the regulator maintains its control while supporting industry-led solutions. These extra components help build a more comprehensive framework that safeguards investors and enhances the emergence of a vibrant financial market in India.

Solutions and Suggestions

Proposed solutions

In light of the above discussion, it is clear that the current framework by SEBI must be changed and also the effective regulatory frameworks of other countries should be looked at in order to address the identified regulatory gap and protect Indian investors across all ages. The SEBI has already given us its consultation paper on regulating finfluencers. To close this gap, the author recommends a four-pronged approach.


Most importantly, there is no mechanism for registering finfluencers, which should be addressed as a matter of urgency. A registration mechanism may be instituted by the SEBI; it would ideally have some conditions such as one has to earn CFP certification or pass an aptitude test. This would ensure that there is a minimum level of qualification met and investors could trust whatever information they are given.


Second, SEBI could make mandatory some disclosure requirements for finfluencers. This will ensure that any of the companies that they have clearly stated in the video or are associated with as well as the related possible conflicts of interest connected to companies; the investor may draw a correlation with their association and them promoting the same company. Moreover, there should be a transparent exposition of all compensation pacts including sponsorships and affiliate marketing. These criteria will help viewers choose wisely and evaluate the quality of advice provided. In addition, on all its materials, finfluencers can be required by SEBI to include risk disclosures so that viewers are aware of inherent risks associated with investments.


The existence of an enabling environment for content regulation that supports online financial advice, could be the third. Through collaboration between SEBI and social media platforms, it is possible to establish and eliminate misinformation. There are instances where Finfluencers may have to elucidate that they also provide money particulars as a part of direction from their personal experiences. From this point of view, sharing truth and preventing any misleading statements will be the next step taken. This would encourage SEBI to set aside resources for creating user-friendly reporting tools and content reviewing teams.


Lastly, SEBI needs to work with its overseas counterparts to exchange and adopt best practices and regulations. This can also be extended to sharing of technologies that may aid in improved control and oversight. Using such technologies, SEBI could also monitor possible breaches and as a result reliable financial information could be disseminated with the use of supervisory technologies.


While the above given solutions are especially catered to the Indian context, we can pick up a lot more policies if we look around other jurisdictions. These policies are put across as mere suggestions and not solutions which can be directly applied in India. The primary jurisdiction that needs to be looked at here is New Zealand. It recently brought a new set of legislation that includes a defined code of behaviour for finfluencers, describing the moral and professional conduct that a finfluencer must uphold. It also provides for tiered mechanism of licensing the finfluencers based on the complexity of advice they provide to the end-consumer i.e., the investor.


The policy by New Zealand goes beyond mere basis principles of transparency and accountability, and imposes liability to have content disclaimers in order to differentiate financial advice from general information within the regulatory framework. They also require to prominently display risk warnings, especially for high-risk investments such as crypto assets. Regulation of any kind for crypto currency is currently missing in India.


Taking a cue, we may also look to adopt a system of imposing certification requirements and having minimum educational qualifications for finfluencers. Given that they look to provide complex advice in a very simplified manner to a often very naïve investor, it is ideal that India adopts the system. Further, we could also look to have training requirements before a person is registered as a finfluencer by the SEBI so that the body has a chance of keeping the finfluencers in check.


Finally, drawing from the New Zealand regulations, we could also look to put consumer education standards into place, giving the investor the knowledge and resources they need to recognise reliable financial information on the internet.


These suggested policies from New Zealand can be applied to India, however, they should look to cater to the specific needs of the Indian investor and the market. This is a general requirement if we look to maintain a thriving financial industry which promotes fintech as well takes care of the investors without stifling with innovation.

[1] Mia Stefanou, “Finfluencers in the Wild” A Call for Regulation Addressing the Growth of Online Investment Advice, 88 Brooklyn Law Review 959 (2023).


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