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  • Harshit Meena

India's Guidelines for Finfluencers: Key Elements for Consideration

[Harshit is a student at National Law University, Jodhpur.]

The rise of social media has also launched financial influencers amongst other types of influencers. Financial influencers (finfluencers) offer information, opinion, and advice on financial topics such as stocks, mutual funds etc. primarily over social media. Plenty of consumers view finfluencers' content which greatly affects their investment decisions. Further, financial companies through finfluencers advertise their financial products and services.

It can be said that finfluencers have a prominent say with an eminent voice in the financial industry, but interestingly, their conduct is unregulated in India. In numerous instances, finfluencers are not qualified to provide financial information and end up disseminating false financial information which leads to flawed financial decisions by the public. Due to lack of regulation, such influencers extricate themselves with zero liability. To address this issue, the Securities and Exchange Board of India (SEBI) is on the path of regulating such influencers and is in the works to release guidelines for finfluencers as stated by one of SEBI’s whole-time directors in an event.

Guidelines for finfluencers should accommodate a set of elements for their efficient implementation. Countries such as Australia, China, Germany have efficiently enshrined them. SEBI’s guidelines should take note of certain policy considerations and can draw inspiration from such countries. In the article, the author sheds light on such key elements and how they can be implemented by SEBI. Further, the author provides concluding remarks while devising solution for establishing quality check on finfluencers.

Accommodation of Key Elements

It is pertinent for SEBI to enshrine the following elements that have been enlisted by numerous countries in their guidelines for finfluencers.

An unambiguous definition of financial advice

Finfluencers produce an assortment of financial content ranging from a simple interpretation of financial terms to providing opinions on a company’s public offer. Hence an important question that arises is, what truly constitutes as financial advice by a finfluencer?

An advice relating to investing in, purchasing, selling or otherwise dealing in securities or investment products, and advice on investment portfolios containing securities or investment products, whether written, verbal or through any other means of communication for the benefit of the client, has been termed as 'investment advice' under Regulation 2(1)(l) of the SEBI (Investment Advisers) Regulations 2013. But the regulation explicitly exempts advice given through social media by finfluencers.

Such category of advice is covered under SEBI (Research Analysts) Regulations 2014 (SEBI Research Analyst Regulations) through research report under Regulation 2(1)(w). Unfortunately, financial advice from a finfluencer will be excluded from its ambit, as a research report can be provided only by a certified research analyst by SEBI which requires a post graduate degree from National Institute of Securities Markets under Regulation 7(1)(iii). Hence, no Indian legislation or guidelines provide a concise definition of 'financial advice' that is applicable over the information provided by finfluencers.

Numerous countries under their guidelines for finfluencers have lucidly defined 'financial advice'. Australia has established guidelines for finfluencers through Information Sheet 269, under which financial product advice has been clearly defined. Further, European Securities and Markets Authority on similar lines has defined 'investment recommendations'. On such lines, SEBI should clearly establish the definition of 'financial advice' under its guidelines.

Mandatory disclosures in advertisement

Finance influencer marketing industry is on a boom due to which numerous financial companies approach finfluencers for advertisement of their financial products and services. These finfluencers carry out such advertisement without disclosing their affiliation with such brands and compensation that they receive. In numerous instances, such companies and their financial products and services turn out to be a scam which results in grave financial damage to the consumers that utilize such services on the recommendation of such finfluencers. Further, such finfluencers easily wiggle out of such scenarios with zero liability for their actions. SEBI’s Research Analyst Regulations under Regulation 19 mandates research analysts to disclose their financial interest and any form of compensation received from the company whose financial products and services are being advertised. Since the regulation governs only a specific bracket of research analysts which are registered with SEBI, finfluencers will fall outside the ambit of the regulation.

The Advertising Standards Council of India (ASCI) has established guidelines for social media influencers which mandate disclosure label over the content for financial service companies as an advertisement. In reality, however, the ASCI guidelines have no impact over finfluencers as ASCI does not hold any power to penalize finfluencers for breach. It merely holds the power to refer such breach to the concerned regulatory authority.

Countries such as Germany have established strict guidelines that mandate finfluencers to disclose their relationship with financial companies in the event of advertisement of the company’s financial product or service. Germany’s Unfair Competition Act, through Section 5a(6), mandates finfluencers to label their content created for financial services companies as 'advertisement' for which they receive compensation. Such view has been upheld by German Federal Supreme Court in numerous judicial precedents. Further, Article 2 of the Delegated Regulation on Market Abuse mandates finfluencers to disclose the name of the financial company for which the advertisement is being carried out.

It is pertinent for SEBI to draft guidelines that mandate finfluencers to disclose their relationship with financial services companies while advertising their financial service and to provide disclosure label as “advertisement”. This will at least provide consumers with a clear knowledge that the information on the product is being given out as an advertisement and not as an independent opinion of the finfluencer.

Quality checks over finfluencers

Countries such as Australia and China have developed efficient quality checks over finfluencers. In Australia, finfluencers are mandated to possess Australian financial services (AFS) license for providing financial product advice pursuant to Section 911A of Corporations Act 2001. Similarly, China through Article 13 of Code of Conduct for Internet Hosts dated 22 June 2022, has established that for content pertaining to finance that requires a higher degree of professionalism, the influencers should obtain the corresponding professional qualifications, and only in such circumstances can they be allowed to live stream or publish their opinions online. SEBI can draw a lesson from such countries and inculcate such mechanisms in its own guidelines.


Indian finfluencers cannot be left unregulated as they hold the potential to affect investment decisions and trends of massive online consumers and it’s the call of the hour to monitor such influencers. SEBI has timely addressed this alarming call and has set out to draft guidelines for finfluencers. The author humbly submits that it is pertinent to establish a quality check on finfluencers which ensures that individuals who possess sufficient educational and professional qualifications in the financial field are permitted to provide financial advice. A system of checks and balances needs to be established by SEBI under its guidelines.


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