Financial influencers registered with the Association of Mutual Funds in India (AMFI) may face increased scrutiny from the Securities and Exchange Board of India (SEBI). This comes as the market regulator intensifies its efforts to combat the spread of financial misinformation on social media platforms, as per a Mint report.
Tuhin Kanta Pandey, chairperson of SEBI, revealed to Mint that the regulator is actively working to harmonize the advertisement codes that apply to various Sebi-regulated entities. “I have been talking to various associations. Several things can be done in terms of rationalization, removing redundancy, in case of combining things, and sometimes combining things across regulations. For example, your advertisement code might be different for different regulations, whether it can be made consistent if the objective is to achieve the same thing,” he said.
Pandey also addressed the role of AMFI in regulating mutual fund distributors (MFDs). “AMFI is supposed to regulate mutual fund distributors (MFDs). If it falls short, our surveillance systems will take care of it,” he stated.
SEBI’s recent actions, including the removal of approximately 70,000 unregistered digital financial advisors with the help of Meta and Google, highlight the regulator’s commitment to curbing misinformation. “We are working with the ministry of electronics and information technology (MeitY) and social media platforms—wherever Sebi has the power to do so, Sebi will take it down,” Pandey confirmed.
Concerns have been raised about the significant number of unregulated finfluencers providing financial advice. “The much larger issue is about finfluencers who deliberately are trying to remain outside the regulatory purview. Even among these, the ones offering fraudulent advice or indulging in blatant misrepresentation with virtually no disclosures can cause more damage to unsuspecting investors,” said Pankaj Sharma, director, capital markets policy, CFA Institute. He also emphasized the necessity for “regular and stringent content review” to identify and address offenders.
The SEBI chairman also voiced concern about the lack of registered investment advisers(RIA’s) in India, and the need for more people to enter that profession.
“We have to look at the systemic issues of why people are not coming forward—are the entry barriers large enough, or are we facilitating? The second is also educating people about whether they are prepared to pay for advice. Because I think, to some extent, free advice has to evolve as a paid business,” he stated.”