The Securities and Exchange Board of India (SEBI) has implemented several measures to control advertising malpractices among Banking, Financial Services, and Insurance (BFSI) intermediaries, particularly in response to the rising incidence of fraud on digital platforms. Here are the key initiatives and official circulars related to this effort:

New Guidelines for Advertising

  • Verification Requirement: SEBI has mandated that all registered intermediaries must verify their identities before publishing advertisements on social media platforms. This includes registering on platforms like Google and Meta using the email addresses and mobile numbers registered with SEBI’s Systematic Investment (SI) Portal[1][2].
  • Compliance Deadline: Intermediaries are required to update their contact details in the SEBI SI Portal by April 30, 2025. Non-compliance could lead to restrictions on their advertising activities[1][3].
  • Focus on Investor Protection
  • Curbing Fraudulent Activities: The guidelines aim to enhance transparency and protect investors from scams that exploit social media. Fraudsters often lure victims with false promises of risk-free returns and misleading endorsements[2][3]. SEBI’s advisory has specifically highlighted the dangers posed by unregulated entities offering dubious financial advice online[1].
  • Collaboration with Social Media Platforms: SEBI is working closely with social media providers to ensure that only verified intermediaries can advertise their services, thereby reducing the risk of misleading promotions[4].

Circulars Issued

  1. Guidelines for Registered Intermediaries (March 21, 2025): This circular outlines the new verification requirements for advertising on social media platforms and emphasizes the need for compliance by the specified deadline[1][2].
  2. Advertisement Code for Investment Advisers (April 6, 2023): This code prohibits misleading advertisements by investment advisers and research analysts, banning superlative claims and promises of assured returns. It also mandates that all advertisements include a standard risk warning[5].
  3. Crackdown on Finfluencers: SEBI has tightened regulations regarding financial influencers (finfluencers) in the BFSI sector, requiring them to register to ensure accountability and transparency in their promotional activities[6].

These measures reflect SEBI’s commitment to creating a safer investment environment by addressing the challenges posed by digital advertising malpractices within the BFSI sector.

What are the specific steps intermediaries need to follow to verify their identities on social media

To verify their identities on social media platforms as mandated by SEBI, intermediaries must follow these specific steps:

  1. Register on the SEBI Systematic Investment (SI) Portal: Intermediaries must ensure that their contact details (email addresses and mobile numbers) are registered with the SEBI SI Portal.
  2. Verify Contact Information: They need to verify their registered contact information on social media platforms like Google and Meta. This involves using the same email and mobile numbers that are linked to their SEBI registration.
  3. Compliance with Guidelines: Intermediaries must adhere to the guidelines set forth by SEBI, which include ensuring that all advertisements are compliant with regulations and do not mislead investors.
  4. Update Information by Deadline: All required updates to contact details must be completed by April 30, 2025, to avoid restrictions on advertising.
  5. Maintain Transparency: Intermediaries should ensure that their advertising practices are transparent and do not mislead potential investors regarding the nature of their services.
  6. Monitor Compliance: Ongoing monitoring of compliance with these verification requirements is essential to maintain accountability and prevent fraudulent activities.

These steps aim to enhance accountability and protect investors from misleading advertisements in the BFSI sector[7][8].

How will these new guidelines impact the advertising strategies of BFSI companies

The new guidelines issued by SEBI for BFSI intermediaries are set to significantly impact their advertising strategies in several ways:

Enhanced Compliance Requirements

  •   Verification of Identity: Intermediaries must now verify their identities on social media platforms, which adds an extra layer of compliance to their advertising strategies. This process requires them to register on the SEBI Systematic Investment Portal and ensure their contact details are accurate, which may slow down the speed at which they can launch new campaigns.
  •   Adherence to Content Regulations: The guidelines impose strict requirements on the content, format, and disclosures in financial advertisements. This means that BFSI companies will need to invest more time and resources in ensuring that all promotional materials comply with these regulations, potentially leading to more conservative messaging.

Shift Towards Transparency

  •   Building Consumer Trust: The emphasis on transparency in advertising is likely to lead BFSI companies to adopt more straightforward and honest communication strategies. As consumers increasingly prioritize transparency when selecting financial products, companies may shift towards educational content that clarifies services rather than aggressive marketing tactics[9].
  •   Focus on Ethical Standards: With the new guidelines promoting ethical advertising practices, BFSI firms will need to ensure that their marketing strategies align with these standards. This may involve revising existing campaigns to eliminate misleading claims and focusing on fair practices.

Strategic Adaptation

  •   Increased Use of Technology: To navigate the new compliance landscape effectively, BFSI companies are likely to leverage technology for monitoring and ensuring adherence to regulatory requirements. This could involve using data analytics tools to track consumer engagement and compliance metrics more efficiently[10][9].
  •   Agile Marketing Strategies: The evolving regulatory environment will necessitate agile marketing strategies that can quickly adapt to changes. BFSI companies might implement more dynamic campaign management processes that allow for rapid adjustments in response to regulatory updates or consumer feedback[9].

Educational Content Focus

  •   Content Marketing Shift: As educational content becomes more valued by consumers, BFSI firms may pivot their advertising strategies towards providing informative resources that help potential customers understand financial products and services better. This aligns with the trend where a significant percentage of consumers appreciate educational content from financial institutions[9].

Are there any penalties for intermediaries who fail to comply with these new guidelines

Intermediaries that fail to comply with the new SEBI guidelines face several significant penalties, which can include:

  1. Financial Penalties: Non-compliance may result in hefty fines, which can vary widely. Specific violations can lead to fines ranging from ₹10 lakh to ₹25 crore, or three times the profit gained from the violation, whichever is higher[11].
  2. Legal Action: SEBI has the authority to initiate legal proceedings against non-compliant intermediaries, which may include civil and criminal penalties depending on the severity of the violation. This could lead to lengthy legal battles and additional costs for the intermediaries[11].
  3. Cancellation of Registration: SEBI can cancel the registration of intermediaries that do not meet compliance requirements. This has occurred in past instances where stock brokers and commodity brokers failed to adhere to regulations[11].
  4. Reputational Damage: Non-compliance can severely damage an intermediary’s reputation, resulting in a loss of client trust and potential business opportunities, which can have long-term implications for their operations[11].
  5. Increased Regulatory Scrutiny: Intermediaries found in violation may face heightened scrutiny from SEBI, leading to more frequent audits and investigations into their practices, further straining their resources[11].
  6. Investor Grievances: Increased investor complaints due to non-compliance can lead to further investigations by SEBI, compounding the intermediary’s issues and potentially resulting in additional penalties[11].

These penalties underscore the importance of strict adherence to SEBI regulations for intermediaries operating within the BFSI sector.

How does SEBI plan to monitor and enforce these new guidelines

SEBI plans to monitor and enforce the new guidelines for BFSI intermediaries through a multi-faceted approach that includes the following strategies:

Regular Compliance Audits

  •   Systematic Audits: SEBI will conduct regular audits of intermediaries to ensure compliance with the new advertising guidelines. This includes reviewing their advertising practices and verifying that they adhere to the requirements set forth in the guidelines.

Real-Time Monitoring

  •   Automated Systems: Intermediaries are required to implement automated systems that can monitor their advertising activities in real-time. These systems will generate alerts for any violations or discrepancies, allowing for quick corrective actions.

Reporting Requirements

  •   Mandatory Reporting: Intermediaries must submit periodic reports detailing their compliance with the guidelines. This includes documentation of their advertising strategies and any changes made in response to regulatory requirements.

Enforcement Actions

  •   Penalties for Non-Compliance: SEBI has established a framework for imposing penalties on intermediaries that fail to comply with the guidelines. This may include financial penalties, legal action, and potential cancellation of registration.

Collaboration with Social Media Platforms

  •   Verification Processes: SEBI is collaborating with major social media platforms to ensure that only verified intermediaries can advertise their services. This partnership aims to enhance accountability and reduce the risk of fraudulent advertisements.

Investor Feedback Mechanisms

  •   Grievance Redressal: SEBI encourages investors to report any misleading advertisements or practices they encounter. This feedback will be used to identify non-compliant intermediaries and take appropriate enforcement actions.

Capacity Building

  •   Training and Resources: SEBI will provide resources and training to intermediaries to help them understand and implement the new guidelines effectively. This includes workshops and materials aimed at fostering compliance culture within organizations.

By employing these strategies, SEBI aims to create a robust framework for monitoring and enforcing compliance among BFSI intermediaries, thereby enhancing investor protection and market integrity.

What role does the Advertising Standards Council of India (ASCI) play in these new regulations

The Advertising Standards Council of India (ASCI) plays a crucial role in the advertising landscape, particularly in relation to the new regulations affecting BFSI intermediaries. Here are the key aspects of ASCI’s involvement:

Self-Regulatory Framework

  •   Voluntary Self-Regulation: ASCI operates as a voluntary, non-statutory body established to promote ethical advertising practices. It provides a self-regulatory code that outlines standards for truthfulness, decency, and social responsibility in advertising[12][13].
  •   Code of Conduct: The ASCI Code serves as the de facto standard for advertising practices in India, particularly in the absence of comprehensive advertising laws. It sets guidelines that advertisers must follow to avoid misleading claims and ensure fairness in competition[14][12].

Monitoring and Complaint Handling

  •   Consumer Complaints Council (CCC): ASCI has a dedicated body, the Consumer Complaints Council, which investigates complaints from consumers and competitors regarding advertisements that may violate its code. This council evaluates claims and can mandate modifications or removals of misleading advertisements[15][16].
  •   Fast Track Complaint Process: ASCI offers a streamlined process for handling complaints, allowing for quicker resolutions compared to traditional legal avenues. This helps maintain public trust in advertising while reducing the burden on judicial systems[14][12].

Collaboration with Regulatory Bodies

  •   Partnerships with Government Agencies: ASCI collaborates with various regulatory bodies, including the Ministry of Information and Broadcasting, to ensure that all advertisements comply with established codes. In 2006, a mandate was issued requiring TV advertisements to adhere to ASCI’s standards[15][16].
  •   Oversight on Specific Sectors: ASCI has formalized agreements with organizations like the Food Safety and Standards Authority of India (FSSAI) to oversee misleading advertisements in specific sectors, such as food and beverages. This collaboration enhances its monitoring capabilities across diverse media platforms[16].

Impact on BFSI Sector

  •   Guidance on Compliance: With the introduction of SEBI’s new guidelines for BFSI intermediaries, ASCI’s role becomes even more critical. It provides guidance on how these companies can align their advertising strategies with both SEBI regulations and ASCI’s ethical standards.
  •   Promoting Ethical Practices: ASCI’s emphasis on truthfulness and fairness supports SEBI’s objectives of protecting investors from misleading advertisements, thus fostering a more trustworthy financial market environment.

In summary, ASCI functions as an essential regulatory body that helps ensure ethical advertising practices across industries, including BFSI, by providing a framework for compliance and addressing consumer grievances effectively.

Conclusion

Overall, the new SEBI guidelines will compel BFSI companies to rethink their advertising strategies, focusing more on compliance, transparency, and ethical practices while leveraging technology for effective engagement. This shift is expected to foster greater consumer trust and long-term sustainability in the competitive BFSI landscape.

 

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Sources:

  1. https://economictimes.com/markets/stocks/news/sebi-mandates-advertiser-verification-on-social-media-to-curb-investment-frauds/articleshow/119309602.cms
  2. https://www.cnbctv18.com/market/sebi-new-guidelines-to-prevent-fraud-on-youtube-facebook-instagram-whatsapp-telegram-x-19578504.htm
  3. https://www.businesstoday.in/technology/news/story/sebi-introduces-new-guidelines-for-intermediaries-advertising-on-social-media-platforms-469138-2025-03-24
  4. https://inc42.com/buzz/sebi-tightens-digital-advertising-norms-for-registered-entities/
  5. https://economictimes.com/markets/stocks/news/sebi-issues-advertisement-code-for-investment-advisers-research-analysts/articleshow/99275749.cms
  6. https://www.icubeswire.com/press-release/sebis-crackdown-on-finfluencers-to-impact-advertising-in-bfsi-expected-to-affect-other-categories-too/
  7. https://www.thebridgechronicle.com/tech/sebi-verification-social-media-advertising
  8. https://pib.gov.in/PressReleaseIframePage.aspx?PRID=1882060
  9. https://tyroo.com/bfsi-advertising-insights-strategies-success-apac-region/
  10. https://www.storyboard18.com/special-coverage/the-significance-of-compliance-and-regulatory-considerations-in-digital-marketing-for-bfsi-32266.htm
  11. https://quicktakes.io/learn/criminal-or-civil-law/questions/what-are-the-consequences-of-noncompliance-with-sebi-regulations-for-intermediaries     
  12. https://blog.ipleaders.in/advertisement-standards-council-india-asci/  
  13. https://www.tutorialspoint.com/advertising-standards-council-of-india-asci
  14. https://www.scconline.com/blog/post/2024/10/14/addressing-the-issue-ascis-role-and-the-limits-of-its-authority/ 
  15. https://lawbhoomi.com/advertisement-standards-council-of-india/
  16.   https://www.thepharmajournal.com/archives/2024/vol13issue4/PartB/13-4-34-325.pdfÂ